BOJ action of any kind doesn’t look imminent. The BOJ did downgrade its assessment on exports at its meeting in August but Governor Kuroda appeared more optimistic at Jackson Hole stating that global growth was rebounding and that exports would “gradually catch up”. He also described corporate profits as “quite good” and the trend in consumption as “relatively robust”. We expect the BOJ to extend the current QQE program through to the end of 2016, with the announcement possibly coming at the October BOJ meeting.
We expect more of what came in August going forward with mixed economic performance in Japan coupled with a continued improvement in the US, which should result in a gradual move higher in USD/JPY. A further gradual shift in FOMC policy bias and the ECB’s easy bias should help maintain yen weakness against the dollar. Our Q2-2015 forecast is 110.00.
BTMU