Forex Flash: Expect market disappointment at BoJ meeting - BBH

FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that the two-day BOJ meeting also ends Thursday, and they continue to see scope for market disappointment that leads to a yen rebound.

They feel that much has already been priced in, and it will be hard for the central bank to “shock and awe” markets that are already expecting more aggressive action under the new BOJ leadership. They write, “Even Abe is backtracking a bit, saying earlier this week that the BOJ may not meet the new 2% inflation target over the course of two years. The BOJ will likely announce some new measures tomorrow but no matter what it does in the coming months, we continue to believe that the bulk of the yen’s weakness is already behind us.”

Apr 3, 2013

Forex Flash: Biggest Toshin purchases since mid 2011 - Nomura

Nomura strategist Yujiro Goto notes that Japanese investors are estimated to have purchased JPY169bn (USD1.8bn) of foreign currency-denominated toshins last week according to NRI.

Forex Flash: BoE dealing with high inflation – TD Securities

The persistent recession in the Eurozone has been affecting UK manufacturing and exports, and so, MPC members managed to talk down sterling, quite effectively. “This helps to support an expectation for improvement in the second half of the year, but at the same time, continues to raise worries on the persistent bugbear for the UK economy”, wrote TD Securities analysts, seeing high inflation largely as a product of the structural adjustment in the economy, “but there is no question that relative to global inflation dynamics, the UK has been stuck with higher than usual inflation”. “Comparing UK and US inflation pre– and post-crisis in the chart to the right, it is clear the only significant difference since 2007 is that UK inflation has tended to run 1.5 percentage points higher and be more volatile than its pre-2007 dynamics. This has left firms less competitive and consumers with less purchasing power and GBP depreciation will help manufacturers but add yet another hurdle to sustaining a consumer recovery”, said analyst Richard Kelly, expecting monetary stimulus to continue being less effective than usual with the drag from bank capital needs.