Yen Liquidity Dries Up
USDJPY broke back below 90.00 overnight amid nervous and illiquid trading conditions ahead of Tuesday’s much-anticipated BoJ policy decision. There were little further headlines on what to expect, although press reports have already conditioned the market to look for a new 2% inflation target, a JPY 10 trn extension to the APP, and the possibility of a cut to the interest rate paid on excess reserves. This is a two-day meeting which has already begun, which means local newspapers are likely to broadcast their impressions tonight on how the first day of discussions has gone. Although we closed our long EURCHF trade recommendation on Friday (having hit our stop), we remain long NOKSEK targeting a move up to 1.20. Today’s data calendar is exceptionally light given the US holiday, although the regular monthly meeting of Eurozone finance ministers will be worth monitoring given how to bailout Cyprus is expected to feature in the discussions.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank