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USD/JPY: BoJ could play its part in supporting the upward trend - Commerzbank

FXStreet (Córdoba) - According to Thu Lan Nguyen, analyst at Commerzbank in the coming week, the Bank of Japan could play its part in supporting the upward trend in USD/JPY by fuelling speculation about further expansionary measures.

Key Quotes

“The upward trend in USD/JPY may also gain support from the Japanese side in the coming
week though, as the monetary policy meeting of the Bank of Japan (BoJ) ends on Tuesday and, given the disappointing inflation trend so far, speculation about further expansionary measures from the central bank at the end of this month has increased (BoJ meeting on 31 October)”.

“We believe that the BoJ will not reach its inflation target and therefore will ultimately decide in favour of further large-scale asset purchases. That said, we do not expect such a step until early next year as the BoJ will probably allow itself time to be able to better estimate the inflation trend.”

“Nonetheless, the BoJ’s rhetoric will change. While it has been quite optimistic about the outlook for the economy and inflation so far, it is likely to be more cautious on inflation now given the downside risks. This should fuel speculation about further expansionary measures and weigh on the JPY”.

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