Still Waiting On Japan
With the BoJ’s next policy decision now less than two weeks away, investors are still weighing (and re-weighing) the likelihood of forceful policy action. The last 36 hours has brought something of a reality check to overblown market expectations. Still, there remains a deep-seated belief (among international investors at least) that the new administration is serious about engineering a weaker yen and that therefore it is only a matter of time before the BoJ embarks on a radical policy adventure. Meanwhile Fitch warned overnight it would consider downgrading Japan’s sovereign rating unless action is taken to address the public debt situation. This was no surprise given the existing negative outlook, but the remarks balance recent hopes that the Abe-administration’s reflationary policy could actually be ratingsupportive. We entered a long NOKSEK trade recommendation overnight on the back of Tuesday’s dovish Riksbank minutes: entry level 1.1700, target 1.2000, stop at 15.85.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank