JPY looks to Trump-Abe – BTMU

Currency Analyst Lee Hardman at BTMU assessed the upcoming meeting between President D.Trump and PM S.Abe, with potential implications for the Japanese currency.

Key Quotes

“The main focus in the week ahead for the yen will be the upcoming meeting scheduled on the 10th February between President Trump and Prime Minister Abe. It follows comments from President Trump last week in which he stated that Japan was devaluing its currency through loose monetary policy. Japan will seek to reassure President Trump that they are not deliberately devaluing their currency, and that loose monetary policy is aimed at defeating deflation”.

“The meeting poses some upside risk for the yen which would be sensitive to any further criticism of the BoJ’s loose monetary policy. The yield on the 10-year JGB remains under upward pressure in the near-term which reflects building doubts over the sustainability of maintaining their target at around 0%. The BoJ unexpectedly purchased a further JPY450 billion of five-to-ten yen bonds overnight. It brings cumulative purchases to just over JPY1.6 trillion over the last two days which is the fastest pace since QQE was introduced”.