Ueda Reaffirms Need For BOJ Easing
Despite a soft for risk assets, JPY has come under pressure on Monday offsetting safe-haven inflows. The fall comes in response to comments from new BOJ chief Ueda this morning. Ueda noted that the BOJ must maintain monetary easing for now with inflation still below the bank’s 2% target. Additionally, Ueda noted that the current spike in inflation is likely nearing its peak and is expected to slow in coming months as the upward impact of fuel increases form last year passes.
When asked about any likely tweaks to the bank’s YYC program Ueda refrained from commenting aside from saying that the conditions necessary to weak the program would be where inflation forecasts were at or close to 2%. Looking further out, Ueda noted that the issue of how to manage the bank’s ETF holding would become a bigger issue once it begins considering how to exit the current ultra-loose policy.
BOJ Meeting on Watch Later In Week
Ueda’s comments have pushed back against any building hawkish expectations ahead of the upcoming BOJ meeting this week. With the BOJ likely to reiterate its recent message, keeping ultra-loose monetary policy in place, JPY looks likely to remain weak. The caveat to this is if we see any material shift lower in risk sentiment, driving safe-haven support for JPY.
Technical Views
USDJPY
USDJPY is moving higher again within the bull channel which has framed the recovery off 2023 lows. Price is now moving above the 132.91 level once again putting focus back on a test of the 139.33 level next, in line with bullish momentum studies readings. Above there, 145 is the bigger target for bulls.
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