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18 Mar 2015
USD/JPY supported by divergent monetary policies – Danske Bank
FXStreet (Edinburgh) - Morten Helt, Senior Analyst at Danske Bank, argued the pair remain supported on the back of the opposite monetary stances from the BoJ and the Fed.
Key Quotes
“We continue to see divergence between BoJ and Fed policy acting as a driver of USD/JPY upside”.
“We expect the Fed to hike in June, which should ensure the cross stays supported in the coming months”.
“However, pricing of the Fed hiking cycle is likely to be data dependent and, in the short term, USD/JPY is likely to remain relatively volatile and trade largely in tandem with general risk sentiment”.
“Our baseline is that the BoJ will not ease further. Recent comments from the doves on the BoJ board suggest it will be on hold”.
“If we are right and the BoJ stays put, USD/JPY could rally on FOMC repricing and then range trade again towards year-end as it becomes clear the BoJ is done for now”.
Key Quotes
“We continue to see divergence between BoJ and Fed policy acting as a driver of USD/JPY upside”.
“We expect the Fed to hike in June, which should ensure the cross stays supported in the coming months”.
“However, pricing of the Fed hiking cycle is likely to be data dependent and, in the short term, USD/JPY is likely to remain relatively volatile and trade largely in tandem with general risk sentiment”.
“Our baseline is that the BoJ will not ease further. Recent comments from the doves on the BoJ board suggest it will be on hold”.
“If we are right and the BoJ stays put, USD/JPY could rally on FOMC repricing and then range trade again towards year-end as it becomes clear the BoJ is done for now”.