- BoJ is said to see no need to make a drastic change to the outlook.
- BoJ is said to expect enough data by year-end to weigh a hike.
- BoJ is said to see trade deal with US reducing uncertainty.
This is not a fresh news as we already got similar reports soon after the US-Japan trade deal and the market already adjusted to such expectations. In fact, the pricing ramped up to 22 bps of tightening by year-end compared to 14 bps before the deal.
In terms of JPY, the next major appreciation will likely need either weak US data to price in more rate cuts than expected for the Fed or some strong data (especially inflation) for Japan to price in more rate hikes than expected for the BoJ. Keep also a keen eye on political shifts as more fiscal support will likely lead the market to expect more rate hikes.
This article was written by Giuseppe Dellamotta at investinglive.com.
