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17 Apr 2014
Two Japanese government headlines support USD/JPY - Nomura
FXStreet (Bali) - On the back of a breakout of 102.10 resistance, Yujiro Goto, FX Strategist at Nomura, notes two headlines on the Japanese government supporting USD/JPY.
Key Quotes
"There were two interesting headlines today on the Japanese government and its policy stance: 1) the likely downgrading of the government’s economic assessment, and 2) the timing of the changes in the GPIF target portfolio."
"Nikkei reports that the Japanese government intends to downgrade its April economic assessment, scheduled to be announced on 17 April, as household consumption has been slowing after the sales tax hike."
"The likely downgrade could be a message from the government to the BOJ, that it sees more downside risks to the economy."
"As the downgrade will be minor, according to the report, it is too early to expect imminent economic stimulus from the BOJ and MOF, but expectations for BOJ easing could increase again after the downgrade, which is set for 17 April."
"Finance Minister Aso Wednesday said foreign investors may react to the GPIF move from June onwards, thus indicating the timing of the next changes in the GPIF target portfolio. We had judged that mid-year, as early as June, was the most likely timing of the announcement of the next target portfolio change, and Finance Minister Aso's comment today increases our confidence level. The update of the growth strategy, which is likely to include some form of corporate tax cut idea, and GPIF reform both expected in June, could support USDJPY and Nikkei toward H2 this year. "
Key Quotes
"There were two interesting headlines today on the Japanese government and its policy stance: 1) the likely downgrading of the government’s economic assessment, and 2) the timing of the changes in the GPIF target portfolio."
"Nikkei reports that the Japanese government intends to downgrade its April economic assessment, scheduled to be announced on 17 April, as household consumption has been slowing after the sales tax hike."
"The likely downgrade could be a message from the government to the BOJ, that it sees more downside risks to the economy."
"As the downgrade will be minor, according to the report, it is too early to expect imminent economic stimulus from the BOJ and MOF, but expectations for BOJ easing could increase again after the downgrade, which is set for 17 April."
"Finance Minister Aso Wednesday said foreign investors may react to the GPIF move from June onwards, thus indicating the timing of the next changes in the GPIF target portfolio. We had judged that mid-year, as early as June, was the most likely timing of the announcement of the next target portfolio change, and Finance Minister Aso's comment today increases our confidence level. The update of the growth strategy, which is likely to include some form of corporate tax cut idea, and GPIF reform both expected in June, could support USDJPY and Nikkei toward H2 this year. "