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Minutes suggest large divergence between BoJ members – Scotiabank

FXStreet (Barcelona) - Camilla Sutton CFA, CMT, Chief FX Strategist at Scotiabank, notes that the BoJ meeting minutes suggest there is large divergence between members but that lower oil and soft demand pushed BoJ to act.

Key Quotes

“Initially JPY weakened on the release of the BoJ minutes; however subsequent comments by Governor Kuroda, that inflation is likely to reach 2% by the beginning of the next fiscal year, forced a retracement.”

“The minutes from the October 31 BoJ meeting (where the committee increased the annual expansion in the monetary base to ¥80trn) suggest that: 1)There is wide divergence in views at the BoJ; and 2) the impetus for more accommodative policy was the decline in oil prices combined with weaker demand following the consumption tax, which risked returning Japan to a deflationary mindset.”

“In our view BoJ policies are supporting a rise in USDJPY, combined with last week’s PBoC announcement, it highlights building pressure in the region from a currency perspective.”

“USDJPY short‐term technicals: bullish—technicals support a rising USDJPY, with the slowing in the upward trend likely a temporary period of rest.”

“Support lies at last Wednesday's open of 116.86 while resistance comes in at the recent high of 118.98.”

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