USD/JPY likely has further room to run lower – TDS
|The Bank of Japan (BoJ) pledged flexibility to YCC stance. Economists at TD Securities analyze JPY outlook.
The BoJ opted for a YCC tweak
The BoJ opted for a YCC tweak with hawkish undertones in the statement as the Bank now highlights upward movements in medium to long-term inflation expectations and greater upside risk on the inflation outlook. However, this wasn't accompanied by upward revisions to FY2024/25 inflation forecasts (more relevant to policy), which came as a surprise.
The YCC tweak doesn't come as too much of a surprise, reflecting the backdrop of relatively strong inflation, ongoing fiscal support, an uber-cheap JPY, and political concerns around the negative cost of living impact of higher inflation. The macro story of a move was always more compelling than the BoJ rhetoric. By extension, USD/JPY likely has further room to run lower.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.