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27 Nov 2015
JPY weakness on the cards? – BTMU
FXStreet (Edinburgh) - According to Derek Halpenny, European Head of GMR at BTMU, the Japanese currency could gain further ground in the next months.
Key Quotes
“From an FX perspective, the confirmation of another fiscal stimulus package will perhaps reduce speculation of additional easing by the BOJ, which may in turn support the yen”.
“The data today, in particular the weak spending data, does suggest policy action is required. With monetary policy scope already limited from here, the obvious conclusion is that fiscal stimulus is now the preferred option”.
“However, there has been a fiscal stimulus program of some sorts each year since Abe came to power, so fiscal stimulus has been used to augment monetary policy changes. Nonetheless, the fiscal stimulus announcement is likely to reinforce the impression of the BOJ hoping to avoid the need for additional monetary easing. That impression may help lift the yen further”.
“The nominal trade-weighted exchange rate for the yen has fallen sharply since PM Abe came to power but the retracement from the low in June is now the largest we’ve had since the decline began (6%). Further yen gains look feasible with EUR/JPY looking vulnerable to the downside over the short-term given the ECB meeting next week”.
Key Quotes
“From an FX perspective, the confirmation of another fiscal stimulus package will perhaps reduce speculation of additional easing by the BOJ, which may in turn support the yen”.
“The data today, in particular the weak spending data, does suggest policy action is required. With monetary policy scope already limited from here, the obvious conclusion is that fiscal stimulus is now the preferred option”.
“However, there has been a fiscal stimulus program of some sorts each year since Abe came to power, so fiscal stimulus has been used to augment monetary policy changes. Nonetheless, the fiscal stimulus announcement is likely to reinforce the impression of the BOJ hoping to avoid the need for additional monetary easing. That impression may help lift the yen further”.
“The nominal trade-weighted exchange rate for the yen has fallen sharply since PM Abe came to power but the retracement from the low in June is now the largest we’ve had since the decline began (6%). Further yen gains look feasible with EUR/JPY looking vulnerable to the downside over the short-term given the ECB meeting next week”.