USDJPY: Positive bias with buying dips to 103.50 - Westpac

Robert Rennie, Research Analyst at Westpac, suggests that they shifted their bias back to buy earlier in the week, but too late as a number of factors saw USD/JPY sharply higher.

Key Quotes

“In no particular order: increased expectations on FOMC pricing; increased BoJ QE expectations/ talk of ‘helicopter money’; Abe’s upper house victory and talk of a ¥20tn fiscal package.

While it’s not clear which are the dominant factors here, at the risk of being overly cautious, we see it as hard for the BoJ to meet and beat expectations. Thus while we stick with a positive bias on the week, this means buying dips to 103.50.

Event risk for Japan

A heavy schedule in terms of event risk for Japan, with much of this concentrated at the end of next week. Monday does bring merchandise trade and the Cabinet Office monthly. Next Friday though has a bumper run of data (jobless, CPI, IP, retail trade, construction) and of course the outcome of the BoJ meeting. Clearly, BoJ anticipation and reaction will dominate price action through next week.”