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25 Apr 2013
Forex Flash: USD/JPY looks neutral ahead - BTMU
Bank of Tokyo Mitsubishi UFJ analysts have taken a look at USD/JPY for the week ahead and are neutral in their forecast and see spot ranging between 97.00-101.00.
They note that the USD/JPY rate has moved close to the 100-level on a number of occasions in response to Kuroda's QQE announcement to expand the monetary base and hit a 2% inflation target. However, they add that yen buying for repatriation of cash earnings from overseas subsidiaries, the recent weak economic indicators in the U.S., and yen buying to avoid option triggers before the BoJ board meeting have countered yen weakness recently. They comment, “Next week market conditions may be more volatile due to reduced liquidity surrounding the yen during Golden week. The upcoming non-farm payroll report will be the most significant event for USD/JPY and the U.S. economy. The FOMC meeting is of course another risk for USD/JPY, although we do not expect any change or notable market reaction, especially given there is no press conference.”
They note that the USD/JPY rate has moved close to the 100-level on a number of occasions in response to Kuroda's QQE announcement to expand the monetary base and hit a 2% inflation target. However, they add that yen buying for repatriation of cash earnings from overseas subsidiaries, the recent weak economic indicators in the U.S., and yen buying to avoid option triggers before the BoJ board meeting have countered yen weakness recently. They comment, “Next week market conditions may be more volatile due to reduced liquidity surrounding the yen during Golden week. The upcoming non-farm payroll report will be the most significant event for USD/JPY and the U.S. economy. The FOMC meeting is of course another risk for USD/JPY, although we do not expect any change or notable market reaction, especially given there is no press conference.”