9 Jun 2015
Limited possibility of a near-term BOJ easing - Nomura
FXStreet (Bali) - Yujiro Goto, Global FX Strategist at Nomura, shares his thoughts post upbeat Q1 GDP in Japan, suspecting limited possibility of a near-term BOJ easing as economic growth picks up.
Key Quotes
"Japanese Q1 GDP was revised up more strongly to +3.9% (q-o-q, saar) from +2.4% (+2.8% expected). Business spending growth was upgraded to +2.7% from +0.4%, while inventory’s contribution was also revised up to +0.6pp from +0.5pp."
"The stronger contribution from inventory suggests a slowdown in GDP growth in Q2 is likely, but strong business investment shows that the economy is gaining momentum. The May Eco-watcher survey showed an improvement in the outlook DI to 54.5 from 54.2 as well, while the current outlook inched down to 53.3 from 53.6. Strong economic growth points to the limited possibility of a near-term BOJ easing, which sent USD/JPY lower slightly."
"Based on the latest JCER survey released last Friday, only 11% of BOJ watchers expect the BOJ to ease by July (36% expected two months ago). Even though JPY short positions at IMM have been recovering, there are few expectations of a near-term BOJ easing, limiting downside risk of USD/JPY from Japanese data and events."
Key Quotes
"Japanese Q1 GDP was revised up more strongly to +3.9% (q-o-q, saar) from +2.4% (+2.8% expected). Business spending growth was upgraded to +2.7% from +0.4%, while inventory’s contribution was also revised up to +0.6pp from +0.5pp."
"The stronger contribution from inventory suggests a slowdown in GDP growth in Q2 is likely, but strong business investment shows that the economy is gaining momentum. The May Eco-watcher survey showed an improvement in the outlook DI to 54.5 from 54.2 as well, while the current outlook inched down to 53.3 from 53.6. Strong economic growth points to the limited possibility of a near-term BOJ easing, which sent USD/JPY lower slightly."
"Based on the latest JCER survey released last Friday, only 11% of BOJ watchers expect the BOJ to ease by July (36% expected two months ago). Even though JPY short positions at IMM have been recovering, there are few expectations of a near-term BOJ easing, limiting downside risk of USD/JPY from Japanese data and events."