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Flash: JPY appreciated broadly against major currencies - Nomura

FXstreet.com (Barcelona) - Nomura strategist Yujiro Goto notes that JPY appreciated broadly against major currencies amid a sharp drop in Japanese equities.

He sees that JGB 10yr yields reached 1.0% in the morning, which may increase concerns about the BOJ's ability to control the JGB market and encourage profit-taking by equity investors Further, he notes that while expectations for the normalization of the Fed's monetary policy are rising, BOJ Governor Kuroda took a relatively optimistic stance on the recent rise in JGB yields.

he continues to add that as Governor Kuroda has been emphasizing that 2% inflation is achievable in two years, investors are now concerned that the BOJ easing may end earlier than they assumed, which has been pushing up long-term JGB yields. He writes, “If Governor Kuroda were to say 2% inflation would not be easy to achieve in two years, investors may be more confident that the BOJ easing would be extended.” However, he feels that such a statement would hurt the new BOJ and Mr Kuroda's reputation, disappointing equity and FX market participants while calming the JGB market. A policy board level decision on the JGB market looks unlikely in the near future.

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