BoJ meeting today likely a non-event - Nomura

FXStreet (Bali) - BOJ meeting today, according to Yujiro Goto, FX Strategist at Nomura, is likely to be non-event.

Key Quotes

"The BOJ is expected to leave its policy unchanged again at its next meeting on 20-21 May. Since the previous meeting on 30 April, new information on inflation has been limited, while the April Eco-Watchers survey showed a strong recovery in the outlook DI, suggesting the economy is more likely to keep expanding beyond the consumption tax hike."

"In addition, Q1 GDP was stronger than expected. Even though the BOJ is likely to focus on economic momentum after the consumption tax hike, stronger capex momentum is an encouraging sign. "

"The BOJ is likely to be more confident about the economic outlook. Market expectations for a BOJ easing keep declining. Our latest client survey suggests no one expects the BOJ to ease in May."

"Surveys on BOJ watchers by Bloomberg and JCER also showed no expectations for a BOJ easing in May. While any optimistic comments from Governor Kuroda may reduce expectations for easing in June and July, expectations of easing by July have been also scaled back. In fact, our economists expect the BOJ to ease in October, not in July. Investors are likely to keep lowering their expectations for the BOJ gradually, even after our latest client survey on 7 May, as economic data have been strong recently."

"Lower expectations of a BOJ easing will likely limit downside risk for USDJPY, and we do not expect today’s BOJ meeting to send USDJPY significantly lower. Positive economic momentum will support risk sentiment among Japanese investors, encouraging them to invest in foreign assets."

"As the BOJ keeps purchasing JGBs at a record pace, real interest rates in Japan will likely decline further, which will also probably accelerate a Japanese portfolio shift into foreign assets."