BoJ's Policy Stance Keeps Yen Under Pressure

JPY: BoJ keeps the yen on the backfoot

Last night's Bank of Japan (BoJ) meeting produced few fireworks, with the BoJ leaving all its policy levers and its statement unchanged. This has allowed the Japanese yen to remain the prime victim of higher US interest rates – with USD/JPY now pushing through 141.00. We are currently listening to Governor Kazuo Ueda's press briefing and we think there is a chance that the BoJ does tweak its policy set-up at the 28 July policy meeting, when new forecasts will be released.

Until that point, however, USD/JPY may well still bid and should remain in the lead should any US data surprise on the upside. Equally, the yen will lag – and will continue to decline on the cross rates – if this current period of dollar weakness does extend after all.