Synopsis:
Nomura maintains a long JPY bias, citing heightened uncertainty around US tariff policy, the Bank of Japan’s sensitivity to yen weakness, and domestic political focus on inflation control. While the BoJ is not expected to hike earlier than current market pricing, Japan’s policy stance suggests yen-supportive undercurrents remain intact.
Key Points:
1️⃣ US Tariff Volatility Supports JPY Longs 📉🗽
-
Nomura highlights unpredictable US trade policy as a persistent source of market volatility.
-
In this context, the yen remains a preferred safe haven despite broader uncertainty.
2️⃣ BoJ Still Responds to Yen Moves 📊🏦
-
BoJ’s January meeting minutes show it remains attentive to JPY depreciation, even without signaling early rate hikes.
-
This implies implicit support for the currency, especially if weakness returns.
3️⃣ Domestic Policy Aimed at Curbing Inflation 📉🗳️
-
Reports suggest PM Ishiba is pushing for anti-inflation measures ahead of the summer Upper House elections.
-
These policies, if implemented, would likely limit inflation risks and cap BoJ policy divergence with the Fed.
Conclusion:
Nomura remains constructive on the yen, citing external tariff-driven volatility, BoJ’s reaction function to FX, and Japan’s political focus on managing inflation. Even without imminent BoJ hikes, the macro and policy mix supports a continued long JPY bias, especially in an environment of rising global uncertainty.
