25 Nov 2015
Clients see modest upside risks in USD/JPY - Nomura
FXStreet (Bali) - Yujiro Goto, Global FX Strategist at Nomura, notes that their latest clients survey shows modest upside risks in USD/JPY, while expectations for a near-term BOJ easing are subdued.
Key Quotes
"Our latest client survey shows subdued expectations for a near-term BOJ easing. As of mid-October, our clients had lower expectations for an October BOJ easing (21.7%) than BOJ watchers, but expectations of a BOJ easing by December have declined further to just 7.4% from 41.7% previously."
"The BOJ’s inaction with downgrades in economic and inflation forecasts in October and positive market movement likely reduced expectations for a near-term easing. Similar to expectations among BOJ watchers, about half of our clients (48.9%) still expect the BOJ to ease by April.
"The BOJ downgraded its assessment on inflation expectations slightly at its last meeting, while Governor Kuroda said he is monitoring wage talks with great interest. The development of wage talks will influence market expectations on a BOJ easing."
"Today Prime Minister Abe said raising wages and the minimum wage is important for the Japanese nominal economy to reach JPY600trn target. Wage talks will be key for Japanese economic policy over the next few months."
"Although expectations for a near term BOJ easing are low, our clients still see upside risks on USD/JPY by year-end. The 122-123 level of USD/JPY during the survey was higher than the previous survey (around 120), but 69% of clients expect USD/JPY to appreciate by year-end, while 59% expected an appreciation previously. Nearly half of our clients (48%) expect a modest appreciation (+0.0-2.5%) of USD/JPY by year-end."
"The results show dip-buying demand for USD/JPY is likely to remain strong, ahead of the FOMC meeting in December. BOJ disappointment is possible next year, but muted expectations for a BOJ easing by year-end should also limit downside risk for USD/JPY."
Key Quotes
"Our latest client survey shows subdued expectations for a near-term BOJ easing. As of mid-October, our clients had lower expectations for an October BOJ easing (21.7%) than BOJ watchers, but expectations of a BOJ easing by December have declined further to just 7.4% from 41.7% previously."
"The BOJ’s inaction with downgrades in economic and inflation forecasts in October and positive market movement likely reduced expectations for a near-term easing. Similar to expectations among BOJ watchers, about half of our clients (48.9%) still expect the BOJ to ease by April.
"The BOJ downgraded its assessment on inflation expectations slightly at its last meeting, while Governor Kuroda said he is monitoring wage talks with great interest. The development of wage talks will influence market expectations on a BOJ easing."
"Today Prime Minister Abe said raising wages and the minimum wage is important for the Japanese nominal economy to reach JPY600trn target. Wage talks will be key for Japanese economic policy over the next few months."
"Although expectations for a near term BOJ easing are low, our clients still see upside risks on USD/JPY by year-end. The 122-123 level of USD/JPY during the survey was higher than the previous survey (around 120), but 69% of clients expect USD/JPY to appreciate by year-end, while 59% expected an appreciation previously. Nearly half of our clients (48%) expect a modest appreciation (+0.0-2.5%) of USD/JPY by year-end."
"The results show dip-buying demand for USD/JPY is likely to remain strong, ahead of the FOMC meeting in December. BOJ disappointment is possible next year, but muted expectations for a BOJ easing by year-end should also limit downside risk for USD/JPY."