15 Jul 2015
Further BoJ easing could see USD/JPY at 130.00 in 12-m – Goldman Sachs
FXStreet (Edinburgh) - Analysts at Goldman Sachs expect the BoJ to implement further easing in October, paving the way for further JPY depreciation.
Key Quotes
“The BoJ surprised the market by expanding its QQE programme at its October 2014 meeting. The Bank announced that it was raising the rate of increase in the monetary base from JPY70trn to JPY80trn, with a greater emphasis on JGB purchases to achieve the target. It also confirmed that the 2% price stability target was open-ended”.
“And at its April 30 meeting, the BoJ unexpectedly rolled back the timing for achieving its 2% inflation target”.
“Nevertheless, it appears the BoJ will fall short of its 0.8% inflation forecast this year, and its 2% target is slipping further into the distance”.
“As such, we expect the BoJ to announce another round of easing when it releases its next Outlook Report in October. We think this continued policy divergence will continue to drive the JPY weaker against the USD”.
“We maintain our USD/JPY forecasts of 122, 125 and 130 in 3, 6 and 12 months”.
Key Quotes
“The BoJ surprised the market by expanding its QQE programme at its October 2014 meeting. The Bank announced that it was raising the rate of increase in the monetary base from JPY70trn to JPY80trn, with a greater emphasis on JGB purchases to achieve the target. It also confirmed that the 2% price stability target was open-ended”.
“And at its April 30 meeting, the BoJ unexpectedly rolled back the timing for achieving its 2% inflation target”.
“Nevertheless, it appears the BoJ will fall short of its 0.8% inflation forecast this year, and its 2% target is slipping further into the distance”.
“As such, we expect the BoJ to announce another round of easing when it releases its next Outlook Report in October. We think this continued policy divergence will continue to drive the JPY weaker against the USD”.
“We maintain our USD/JPY forecasts of 122, 125 and 130 in 3, 6 and 12 months”.