Forex Flash: USD/JPY has scope for downward correction despite BoJ dovish governance – Commerzbank

The USD/JPY reached the highest level in over two years last night, at 94.77, on reports that the likely candidate to BoJ governance is Haruhiko Kuroda, president of the Asian Development Bank, being assisted by Kikuo Iwata and Hiroshi Nakaso. “Markets are expecting this alleged infernal trio to pursue a particularly aggressive monetary policy”, wrote analyst Carolin Hecht. “As a new hopeful for the nomination as governor seems to emerge every few days we will not speculate about the appointment”, she added, expecting only a very short term effect on USD-JPY moves. “What is much more important is that thanks to its ability to change the central bank legislation the government is going to dominate in the end when it comes to Japanese monetary policy”, Hecht continued, seeing potential for a downward correction in the short term.