HALISTER1: JGB Primary Dealer Exit Shows Limit to BOJ’s Toolbox: BofA

JGB Primary Dealer Exit Shows Limit to BOJ’s Toolbox: BofA

(Bloomberg) -- USD/JPY falls on decline in Treasury yields, easing expectations of Fed and BOJ actions, as well as looming Brexit risk, says Takuya Iwasaki, executive general manager of foreign-exchange sales at Bank of America.
  • News that one of Japan’s large banks may return its primary- dealer license is symbolic move, Tokyo-based Iwasaki by phone
  • Market may be aware of BOJ’s limited monetary toolbox; may spur underlying yen strength
  • USD/JPY may test low of June 6 at 106.38 and higher end of 105 levels
  • Liquidity in market is thin ahead of Brexit risk, this may spur yen buying
  • USD/JPY falls 0.5% to 106.85, in 106.72-107.39 range
  • NOTE: Japan’s biggest bank, BOTM-UFJ, said to consider exit as primary JGB dealer
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Takuya Iwasaki (Bank of America Corp)

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