USD/JPY: Policy Board Pushes BOJ for More Easing; Yen Rises

More expansionary wording of the bank’s price outlook released at its Oct. 30 meeting was voted by two new members of the Bank of Japan’s nine-member Policy Board. Takehiro Sato and Takahide Kiuchi sated that the BOJ must carry on with aggressive easing until a 1 percent inflation goal has been steadily maintained. The two members will push on easing measures until 1 percent inflation is in sight, which is deemed to bring the valuation of the Yen to stable levels. In effect, the Japanese economy is expected to strengthen as corporate efforts are prevented to come close to the limit.

Meanwhile, the US economy battles with an anticipated wane of the Core Durable Goods Orders to -0.6 percent in October from 2.0 percent in the previous month. Although consumers are relatively optimistic about future trends, the aftermath of Superstorm Sandy is likely to weaken the coming reading of the CB Consumer Confidence. The drop of spending patterns is to slowdown economic recovery and the increase of the US dollar.

Thus, the Policy Board that will continue to press on the BOJ for more easing sees the advancement of the Yen and the decrease of consumption will abate the Greenback. A sell position is recommended fit for the USDJPY pair.

Aviv N. Shapiro is a Senior Research Analyst and Business Development Officer for AlgosysFx.