Kuroda Still Sounding Dovish
Newly-installed BoJ Governor Kuroda stuck to the dovish script overnight. Two comments in particular seemed to impress investors sending USDJPY gradually 40 pips higher. However these were merely restatements of his existing position. First, Kuroda said (again) that one easing option would be to scrap the BoJ’s self-imposed rule which prevents the stock of Rinban JGBs exceeding the value of yen currency notes in circulation. He also emphasised his desire to lower JGB yields across the curve by purchasing medium- and long-term assets. Again he said JGB purchases up to 5 years and beyond would be an option. USDJPY eventually gave back its gains, but with the new fiscal year just around the corner on April 1st, and a BoJ policy decision on April 4th, we see this retracement as a buying opportunity and stick to our bullish yearend USDJPY forecast of 100. Elsewhere, the Central Bank of Cyprus has decided to keep all commercial banks closed until Thursday (some banks were originally due to open on Tuesday but the re-opening has now been postponed again).
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UBS