USD/JPY: Yen will likely soften on a dovish BoJ policy outcome – Rabobank

Economists at Rabobank discuss the possibility of a tweak in the BoJ’s ultra-easy monetary policy and its implications for the Japanese Yen (JPY).

Signs of sustained wage inflation would be the green light for a policy adjustment

While the JPY would likely soften on a dovish policy outcome on July 28, it is very possible that speculation of a move in September could build quite rapidly. This would limit selling pressure on the JPY.

Signs of sustained wage inflation would be the green light for a policy adjustment by the BoJ while smaller wage rises into next year would likely signal the opposite.

Our forecast of USD/JPY 138 on a three-month view assumes that speculation of a BoJ policy change is maintained into the autumn.