Deflation slows in Japan but BOJ won’t take its foot off the gas
We expect Japan CPI to be flat m/m in May, the first non-negative month since May 2012. Our economists cite JPY weakness as one factor driving the move, but markets are unlikely to anticipate any reduction in scope for BOJ easing with the 2% target still far away. We expect USDJPY to extend its post FOMC gains in the weeks ahead, targeting new highs for the year in Q3.
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BNP Paribas