USD/JPY: Sticking to current levels – Rabobank

Shutdowns look set to undo years of work by both the Bank of Japan (BoJ) and the government to push back on the issues of low growth and disinflationary pressures, per Rabobank.

Key quotes

“Today, the BoJ offered to pay a positive 0.1% interest rate to financial institutions that tap its new loan programme. The BoJ has also announced that it was revising its loose annual limit on bond purchases of Y80 trn, in addition to scaling up the amount of corporate bonds and commercial paper it will purchase.”

“The BoJ today estimated that domestic growth will plunge by -5% in FY 2020 and that any hope of gathering momentum on inflation has been lost in the face of the drop in oil prices and on the fall in consumer confidence.” 

“We expect USD/JPY to hold close to current levels on a 3-month view. While the USD has proved itself to be the ‘go-to’ safe haven of many investors over the past couple of months, the JPY is set to remain particularly sensitive to regional news and currently to rumours regarding the health of N. Korea leader Kim Jong Un.”