Press reports are pointing to a BOJ move as early as March, but I think the majority of market participants don't believe that story because such a shift could create volatility before fiscal year-end in March. |
Pressure on China to revalue against the dollar leads other Asian currencies, including the Japanese yen, to strengthen against the U.S. currency. |
Short-term rate expectations remain the single most important factor for dollar/yen, |
Some market participants are beginning to be concerned about the risks of an earlier rate hike. |
The BOJ is expected to end its so-called quantitative easing policy of flooding the economy with cash by the end of April. That will put upward pressure on short- term interest rates and reduce liquidity in the money markets, which is yen positive for sure. |
The current-account-surplus argument is always yen supportive. |
The euro has upside risk should economic data such as German retail sales give the market a surprise. |
The figures are not so bad and modestly yen positive. The Bank of Japan is on a solid track toward a policy shift this April. |
The markets have already priced in at least one rate hike and are beginning to price in the second rate hike by year-end. Combined with the steady recovery of the Japanese economy, those expectations are likely to push up the yen. |
The near-term outlook for the yen remains bearish, ... obviously it will be difficult to come up with a rate hike and we do perceive some political pressures. |
The trade surplus figures showed strong exports and domestic demand. This shows the economy is robust enough to withstand a rate increase later this year, supporting the yen. |
We cannot expect a 'grand coalition' to undertake bold and speedy reforms, especially of the labor market and tax system. The euro looks weak now. |
We cannot expect a grand coalition to undertake bold and speedy reforms, especially of the labor market and tax system. The euro looks weak now. |
Yen buying seems to be stalling after an initial round of optimism about the Sept. 11 election receded, |
Yen buying seems to be stalling after an initial round of optimism about the Sept. 11 election receded. |