– The Bank of Japan’s plan to end deflation rests on an aggressive plan to buy JGBs, including long term JGBs.
– Ironically, BoJ research suggests life insurers may resist selling long term JGBs to the BoJ.
– Our view remains JPY will continue to depreciate because Japan’s current account surplus has collapsed, not because of BoJ buying of JGBs.
– Our target for USD/JPY of 100.00 was hit today. Our strategy is now to buy USD/JPY on dips below 100.50.
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Commonwealth Bank