13 Feb 2015
Behind Yen shorts flush out, BoJ headlines put in perspective
FXStreet (Bali) - The Yen soared on Thursday, after some misleading headlines in the wires, showing that BOJ said to see any extra stimulus as counterproductive for now, adding that consumer sentiment hurt by any further yen drop.
The market later realized that comments were not a broad agreed view by the BoJ but rather the view from board member Morimoto, who is not a big fan of BOJ QE. Yen strength expanded later in the US session though, mainly on the back of a major disappointment in US retail sales.
On Thursday, the WSJ reported: "Some Bank of Japan officials have grown more concerned about the drawbacks of a weak yen, making them increasingly cautious about the central bank undertaking additional quantitative easing, according to people familiar with their thinking. These officials are worried that a further sharp decline in the currency could hurt Japan’s fragile economic recovery by damping consumer spending, which accounts for around 60% of gross domestic product, the people said."
However, Nomura recently noted, on the appointment of Mr. Harada as new board member: "Harada is likely to support Governor Kuroda’s accommodative policy stance, which will make it easier for Governor Kuroda to gain a majority on the board, when he wants to ease monetary policy again. Mr. Harada’s appointment suggests Prime Minister Abe’s strong confidence in Governor Kuroda’s accommodative monetary stance, while there have been concerns over possible differences in their views on JPY weakness and further monetary easing. Another board member, Mr. Morimoto, is also scheduled to retire in June, and Prime Minister Abe is likely to appoint another dovish person then, to continue shifting the balance of power on the board to the more dovish side. We expect accommodative monetary policy by the BOJ to support gradual JPY weakness throughout 2015. A tail risk of sudden changes in the BOJ’s monetary stance has diminished significantly, after the official nomination of Mr. Harada."
The market later realized that comments were not a broad agreed view by the BoJ but rather the view from board member Morimoto, who is not a big fan of BOJ QE. Yen strength expanded later in the US session though, mainly on the back of a major disappointment in US retail sales.
On Thursday, the WSJ reported: "Some Bank of Japan officials have grown more concerned about the drawbacks of a weak yen, making them increasingly cautious about the central bank undertaking additional quantitative easing, according to people familiar with their thinking. These officials are worried that a further sharp decline in the currency could hurt Japan’s fragile economic recovery by damping consumer spending, which accounts for around 60% of gross domestic product, the people said."
However, Nomura recently noted, on the appointment of Mr. Harada as new board member: "Harada is likely to support Governor Kuroda’s accommodative policy stance, which will make it easier for Governor Kuroda to gain a majority on the board, when he wants to ease monetary policy again. Mr. Harada’s appointment suggests Prime Minister Abe’s strong confidence in Governor Kuroda’s accommodative monetary stance, while there have been concerns over possible differences in their views on JPY weakness and further monetary easing. Another board member, Mr. Morimoto, is also scheduled to retire in June, and Prime Minister Abe is likely to appoint another dovish person then, to continue shifting the balance of power on the board to the more dovish side. We expect accommodative monetary policy by the BOJ to support gradual JPY weakness throughout 2015. A tail risk of sudden changes in the BOJ’s monetary stance has diminished significantly, after the official nomination of Mr. Harada."