HALISTER1: Japan CPI May Not Cause Yen Weakness as BOJ Steps Back: Analysis

Japan CPI May Not Cause Yen Weakness as BOJ Steps Back: Analysis

(Bloomberg) -- USD/JPY could grind lower near term even if Japanese CPI weakens, as recent behavior suggests BOJ may ignore calls to ease so soon after introducing new policy, Bloomberg strategist David Finnerty writes.
  • Lower Fed dot plot has also reduced support for USD
  • USD/JPY has fallen 2% in Sept.
  • FX pair remains in bear channel
  • MACD is still bearishly below zero and signal line
  • Japan’s Aug. CPI is forecast at -0.5% y/y vs -0.4% in July, according to median est. in Bloomberg survey
    • CPI ex-food is expected to be -0.4% y/y vs -0.5% in July
    • Data due 8:30am local time tomorrow
  • Any change in monetary policy since Kuroda became BOJ governor has been followed by no action over several months as the central bank gauges its effectiveness; BOJ tweaked policy on Sept. 21
    • Therefore unlikely to be any further easing this year to aid yen weakness
  • NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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