A note from Commerzbank overnight with remarks on the yen and Bank of Japan
The BoJ has to buy fewer and fewer assets to meet its yield target – as the recent Ministry of Finance data illustrates.
- In view of this fact the indications by BoJ governor Haruhiko Kuroda that the QE volumes may be maintained while the yield target may be raised (we reported on this) make even less sense than ever.
- In addition there are also the falling poll results for Prime Minister Shinzo Abe – one of the leading advocates of the re-inflation efforts.
Everything points towards an early end of the ultra-expansionary monetary policy.
If that was to be the case even more JPY strength would no doubt be justified. In that case reflationing would most definitely not happen. Not now and not in the very distant future.
On the yen:
- It is difficult to see in USD/JPY – as the dollar is also appreciating at present. But EUR- JPY illustrates the rally very clearly. Hardly surprising!
I’m not convinced on the “early end of the ultra-expansionary monetary policy” conclusion, but an interesting view nonetheless.