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Bank of Montreal:
- while Friday’s decision is widely expected to feature an unchanged policy stance, monetary policymakers in Tokyo have historically not been beholden to the consensus.
- On the one hand, Ueda must consider the performance of the yen that has reached its weakest level since November 2022 while also not risking any undue volatility in JGBs that in the 10-year sector reached 75 bp for the first time since 2013 on Thursday.
- Between normalizing policy and the lack of demand for Treasuries, Japan has been a bearish driver for US rates in 2023
- the rate and economic cycle begin to inflect
TD:
- We expect BoJ to leave all policy levers unchanged and doubt the BoJ is eager to spring another curveball at markets after July’s surprise YCC tweak.
- Instead, a lot of focus will be on Ueda’s comments on the Yen as he may be under pressure to lean against JPY weakness in his remarks after USD/JPY continues to drift towards 150 despite verbal interventions from MoF officials.
USD/JPY update heading towards the Bank of Japan statement: