No surprises from the BOJ Minutes this time round, as it is understandable that the incumbent Governor and Board Members will not wish to rock the boat before Kuroda and his 2 Deputy Governors come in. Furthermore, sentiment and direction of current BOJ should have little bearing since this would be the final meeting with Shirakawa has the Governor, making the minutes even less significant. Shirakawa can say whatever he wants or be as hawkish as ever but it would have zero bearing to what Kuroda would do when his nomination is confirmed. Despite this, there are still some nuggets of information from the latest minutes: Some members see buying “risky assets” is an option on top of buying longer-term JGBs. However, one member is concern that inflation rate may exceed 2% target while yet another one wants to see open-ended stimulus immediately.
This clearly indicate that board members are not united in their ideas, and though Kuroda has some supporters for “Stronger Bolder Monetary Policies” (trademark), he may yet still find opposition within BOJ. The oppositions may not be strong enough to derail his easing efforts, but certainly a non-unanimous board will make implementation of radical policies harder.
Yen weakened on the BOJ minutes, pushing the USD/JPY above the swing high of 8th Mar. Price pulled back slightly, but the rally post BOJ Minutes is still mostly intact. Further support could be found along the rising trendline if price falls lower from here. A break below 96.3 will negate current bullish momentum and open up 96.0 round number support, and potentially 95.8 which is the previous swing low around the final trading hours of last Friday. Stochastic reading agrees with a downside scenario as readings are topping, with Stoch/Signal lines crossing as current candle breaks below the previous swing high. Bullish momentum may accelerate if price is able to climb from here and potentially break Today’s high of 96.71.
Daily Chart remains bullish with price breakout out of the consolidation zone and the rising trendline. Evidence of slowing momentum and/or pullback is absent, and current bullish breakout/uptrend extension remains in play.
It appears that market likes the promise of “risky asset” purchases, which dwarf the concern of disunity within BOJ. Perhaps the market is also convinced that Kuroda will get his way no matter the resistance especially since Shinzo Abe is firmly behind his back. However, it is important to note that reaction to the minutes remain muted, which has been the hallmark of recent BOJ related announcements. Market is certainly saturated with rhetoric about stronger intervention and what USD/JPY truly needs is the actual laying out of stimulus and acting on it to maintain full throttle on current bullish breakout.
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