USD/JPY: Correction lower stalled - BTMU

Analysts from The Bank of Tokyo-Mitsubishi UFJ, hold a neutral bias tone in the USD/JPY pair in the short-term. According to them, the pair is likely to trade between 112.00 and 115.00 next week. 

Key Quotes: 

“USD/JPY has traded in a narrow range since the Trump Administration took office last Friday. This week, the BoJ passed on buying 1Yr – 5Yr JGBs for the first time since QQE was launched in 2013. We do not expect the BoJ to make any changes to monetary policy at its meeting next week. The BoJ has been signaling its views on monetary policy through JPY yield curve operations, rather than through statements, of late. Though Abe’s advisors and many Japanese politicians are still pushing for reflation, JPY yield curve shape and BoJ asset purchases must be normalized. The BoJ’s JGB purchase plans for February will probably be more important than its post Monetary Policy Board meeting policy statement on January 31.”

“We do not expect the FOMC to stir up the markets so soon after the presidential inauguration at its January meeting. Exporters exchanging and investors repatriating their overseas cash may support USD/JPY topside, while the lower bound may be supported by JPY capital outflows and hedge trades.”