Flash: Japan's tax hike to sustain mid-term JPY weakness - Nomura

FXstreet.com (Barcelona) - According to Nomura Strategists, a delay in the sales tax hike will be USDJPY negative.

Key Quotes

"Slowing Japanese investment in foreign bonds due to higher JGB volatility, JPY buying by foreign equity investors to keep the hedge ratio stable, and weaker foreign investment by Japanese retail investors due to lower risk tolerance, should send
USDJPY lower, if the tax hike is postponed."

The risk of a slower paced tax hike remains, but our main scenario is the government hikes the consumption tax as scheduled. The decision to hike the tax as scheduled, expected in 1-2 months, should contribute keeping mid-term JPY weakness