RBC: BOJ unlikely to shift policy any time soon; puzzling that analysts are bullish on JPY

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RBC: BOJ unlikely to shift policy any time soon; puzzling that analysts are bullish on JPY

RBC Capital Markets, reports an almost unanimous consensus against any change in policy parameters in the upcoming BoJ meeting early Friday. Surprisingly, despite muted expectations and persistent trends, analysts remain bullish on JPY.

Key Points:

1. Muted Expectations for Change:
   • After the surprise widening of the YCC band in July, there is a consensus for no change in any policy parameters in the next announcement.
   • Only four out of 46 respondents expect a policy change in the remainder of this calendar year, with April 2024 being the most anticipated month for a change.
   • Eleven analysts do not expect any further policy changes this year or the next.
2. Continued Bullish Outlook on JPY:
   • Despite the response to the July policy shift and the continual rally of USD/JPY, analysts maintain a bullish stance on JPY, a stance RBC finds slightly surprising given the circumstances.

Analysis:

• For Forex Traders:
  • JPY Positions: Traders should observe the market sentiment closely, considering the bullish outlook on JPY amidst seemingly stable BoJ policies.
• For Policy Analysts:
  • Policy Stability: Analysts should consider the implications of the stable policy outlook on the broader economic landscape and currency markets.
• For Investors:
  • Market Dynamics: Investors should factor in the persistent bullish sentiment on JPY and the lack of anticipated policy shifts when making investment decisions.

The Takeaway: The BoJ meeting scheduled for early Friday is surrounded by consensus expectations of policy stability, with minimal anticipation of changes this year or the next. However, the prevailing bullish sentiment on JPY, despite such stability and the ongoing USD/JPY rally, is a notable factor for market participants to consider in their analysis and strategy development.

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                This article was written by Adam Button at www.forexlive.com.

Source: RBC: BOJ unlikely to shift policy any time soon; puzzling that analysts are bullish on JPY

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