USD/JPY: Supported by renewed BoJ easing expectations - Nomura

FXStreet (Bali) - According to Yujiro Goto, FX Strategist at Nomura, while the chances of a near-team BOJ easing are still limited, renewed expectations for a BOJ easing into 2015 may support USD/JPY for now.

Key Quotes

"The mild recovery in BOJ easing expectations is not surprising after weak Q2 GDP growth, which is likely to lead to another downgrade in the BOJ’s economic forecast."

"Our economists expect Q2 GDP growth to be downgraded further next week, and the BOJ is very likely to need to cut its economic forecast on 31 October."

"By contrast, July wages increased 2.6% y-o-y, suggesting positive wage momentum accelerates further . Thus, the chances of a near-team BOJ easing are still limited. Nonetheless, renewed expectations for a BOJ easing into 2015, because of weaker economic data, may support USD/JPY for now."

"The combination of a recovery in mid-term easing expectations and subdued near-term easing expectations is likely to be especially supportive for USD/JPY, as USD/JPY selling owing to disappointment from the BOJ will likely be limited."