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USD/JPY: No reason for a range break - BTMU

FXStreet (Córdoba) - According to Derek Halpenny, European Head of Global Market Research at Bank of Tokyo-Mitsubishi UFJ expects the range in USD/JPY to continue, particularly after the Bank of Japan decision.

Key Quotes:

“As we expected, the yen has only advanced modestly in response to the decision of the BOJ to leave its monetary stance unchanged. Once again the BOJ preferred to extend the timeframe for achieving its inflation goal rather than announcing additional stimulus measures to get to the target level sooner.”

“Market participants are unlikely to abandon the view that the BOJ at some point is going to have to implement some additional monetary easing.”

“Is the BOJ’s credibility slowly being undermined by the reluctance to act? It’s a reasonable question and one just posed to Governor Kuroda who of course denied that to be the case”

“We did not think positioning for BOJ action was large and the limited drop in USD/JPY backs that view up.”

“All in all, today was a bit of a non-event with Governor Kuroda sticking to the views held for some time. 3mth implied vol in USD/JPY is currently trading at 8.7, the exact same as the average over the past two years and we see no reason for expecting any notable shift away from the recent trading range of 118.00-122.00. If volatility does pick up it will be from the dollar side rather than from the yen side.”

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