Nomura Research discusses USD/JPY outlook in light of the BoJ policy trajectory.
"We do not expect the BOJ to actually consider near-term rate cuts, and market may not price in the possibility of rate cuts anytime soon, so the near-term impact on JPY will likely be limited. Nonetheless, emphasis on the possibility of rate cuts will increase market views that the BOJ’s policy normalization will be delayed further. Such emphasis also reduces the risk that tweaks to JGB and ETF purchases are viewed as a hawkish shift by the BOJ," Nomura notes.
"Thus, emphasizing the possibility of rate cuts at the March meeting will be beneficial to avoid JPY strength, in our view, and we expect USD/JPY to trade gradually higher after trading within a 103-106 range for the time being," Nomura adds.