USD/JPY downside risks | Forex Factory

  • USD/JPY downside risks

    From ig.com

    The Bank of Japan (BoJ) held steady in their latest October meeting, largely within the market’s expectation following reports that the central bank may be holding fire. Forward guidance had nevertheless been altered in a dovish manner with the line suggesting rates ‘to remain at their present or lower levels’, hinting at a possible move going into December, though this was also within anticipation. With little surprises, the Japanese yen was seen little moved following the meeting. Indeed, the trajectory of the yen itself of late had perhaps provided little impetus for the BoJ to move. More importantly, ... (full story)

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AnniLi
Oct 31, 2019 11:15pm
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This is a very important point because I believe that at the margin we are now going to see a widespread, though not deliberately co-ordinated easing of economic policies (not just monetary) to prevent a further slowdown stage which after all is completely unnecessary given the absence of inflationary pressure. I have been arguing if you take a world economy in slowdown against a background of excess capacity and negligible inflation rates then the obvious outcome is deflation.

Entering 2020 it looks like we'll have a Brexit resolution, a plastering over of China-USA rifts (neither administration will win kudos from a deepening world slowdown and should help the WTO in its fight to re-establish its power to influence global trends, an EU wanting to get on with business (German elections 2021), and of course the US election and possibly impeachment. In short, there is a strong argument that the safe haven argument for JPY and CHF will get weaker not stronger. (Mini crises are always possible.)

Its a very good set of circumstances for a few leaders with vision to cobble together a new set of priorities with each major player exhibiting give and take with a better world prospect the benefit for every country.
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