Forex Flash: JPY strategy profile – Westpac

FXstreet.com (Barcelona) - The splurge of month end data in Japan is upon us, and with it we think increased signs of frustration around Abenomics. We get PMI, IP, jobless, CPI and employment tomorrow. On top of that we get Tankan Monday and then it’s bunker down for the BoJ meeting Wed/ Thu. Domestic data will be worth watching to gauge the extent data falls short of very elevated expectations e.g. IP forecast up 2.5%. To be sure though, the BoJ will be the critical driver for the yen for the week.

Will the BoJ end the bank note rule; bring forward open ended asset purchases; buy more JGBs; merge rinban and APP; engage in an operation twist? According to Global FX Strategist Sean Callow at Westpac, “If so, the market will be impressed. If not, then the current slide in USD/JPY and EUR/JPY is set to continue. This remains our preferred path and price action in the last couple of days looks tired. We maintain a sell bias on EUR/JPY for another week and shift back to sell on USD/JPY.”