USD/JPY can smoothly appreciate – Nomura

Analysts at Nomura explained that the BOJ left its policies unchanged, as widely expected. 

Key Quotes:

“As it introduced new forward guidance on short- and long-term rates while allowing more flexibility in JGB yields at the previous meeting, it likely wants to monitor the efficacy of policy changes/tweaks for now”

” Muted market reaction to Governor Kuroda’s press conference suggests the market accepted the forward guidance, and we expect JGB yields to stay low and stable. The introduction of forward guidance has reduced the risk of market misunderstanding, keeping the correlation between USD/JPY and rate spreads high.”

“As US yields rise, USD/JPY can smoothly appreciate, in our opinion.”