MUFG Research discusses the JPY outlook in light of this week's BoJ policy meeting.
"Market participants appear less concerned over the risk of a dovish surprise at the BoJ’s policy meeting. Current economic conditions are not yet sufficient to justify “something big” from the BoJ. The BoJ is judged as more likely to elaborate on “easing continuation measures” announced in April. A further extension to their forward rate guidance is also a possibility," MUFG notes.
"The BoJ is currently signalling it plans to keep rates unchanged “at least through around spring 2020”. However, Governor Kuroda has already stated that “there is fair possibility that the current low interest rates will be maintained beyond this period, depending on future developments”. Similar to other market participants we remain sceptical that the BoJ can weaken the yen in the near-term. There is currently a high hurdle for the BoJ to re-weaken the yen through additional easing measures," MUFG adds.