Updates from the FXWW Chatroom today

CitiFX Wire.. Europe has walked in and joined in on the selling USDJPY bandwagon. The low so far is 117.295 which was below the 50% Fib of the recent rally from 115.85 to 118.7 at 117.36. This appears to have just about held and USDJPY is now 117.44.
There’s no bias in our flow, Supply from leveraged and real money has been absorbed mainly by retailers buying the dip. 

this from citi as well… USDJPY: Predicted support 
“Since October 1998 there have been 25 times when – as was the case this week – USDJPY has broken Monday’s high on Tuesday by at least Y1.1. Of the 25, only 1 went on to close the next day with net losses of more than Y1.25. The equivalent level on Wednesday is 117.25,” says Predicted Markets. It’s now 117.43 after trading down to 117.295. 

BoAML on BOJ:
I’ve received several inquiries as to whether the BOJ will lower the IOER rate (10bp). Although technically possible, I think it’s unlikely and I am not aware of any local economist that expects it. Even if the BOJ did cut the IOER (ie. to 5bp), it’s symbolic and has minimal impact on the economy and inflation. It has a negative impact on bank and financial institution earnings so could end up to be more disruptive. It may also have a dampening effect on consumer sentiment if as a result banks cut the rates on term deposits (and other s/t money mkt instruments) however modestly. I think it’s just too unclear the impact and not something the BOJ will easily entertain.
Instead, the BOJ may cut the lending rate on its credit facility (which is NOT the same as easing). My guess is that the BOJ is likely to do the following:

1)       Lower their inflation forecast (obviously not easing, but increases the probability down the road…)
2)       Adjust the credit facility program, in particular the extend the loan term from 4yrs to 6yrs or even longer… As noted above, it’s possible that they could cut the lending rate on the credit facility (currently 10bp) lower and keep the IOER at 10bp…

The above are technical adjustments and should not impact the markets materially. Nonetheless, in current market conditions such actions could raise future expectations of more material actions and thus possibly be supportive of asset prices. 

BOJ GOV KURODA: POSITIVE ECONOMIC CYCLE REMAINS INTACT
BOJ GOV KURODA: JAPAN ECONOMY CONTINUES TO RECOVER MODERATELY AS A TREND
BOJ GOV KURODA: INFLATION EXPECTATIONS APPEAR TO BE RISING ON THE WHOLE FROM LONG-TERM PERSPECTIVE
BOJ GOV KURODA: OUTLOOK FOR UNDERLYING CPI TREND INTACT; ANNUAL GAIN LIKELY TO BE LOWER TOWARDS FY2015/16
BOJ GOV KURODA: CONSUMER INFLATION IS LIKELY TO SLOW FOR TIME BEING, REFLECTING DECLINE IN ENERGY PRICES
BOJ GOV KURODA: CONSUMER INFLATION LIKELY TO REACH 2 PCT IN PERIOD CENTRING ON FISCAL 2015/16
BOJ GOV KURODA: BOJ’S QQE HAS BEEN EXERTING ITS INTENDED EFFECTS
BOJ GOV KURODA: SOME BOJ BOARD MEMBERS HAVE MORE CAUTIOUS OUTLOOK FOR CPI
BOJ GOV KURODA: BOJ WILL CONTINUE WITH QQE FOR AS LONG AS NECESSARY TO ACHIEVE 2 PCT INFLATION STABLY
BOJ GOV KURODA: BOJ WILL EXAMINE BOTH UPSIDE, DOWNSIDE RISKS TO ECONOMY AND PRICES, AND ADJUST POLICY AS APPROPRIATE
BOJ GOV KURODA: FALLING OIL PRICES LIKELY TO HELP PUSH UP GLOBAL GROWTH RATE ON THE WHOLE
BOJ GOV KURODA: OIL PRICE DECLINE IS POSITIVE FOR JAPAN AS WILL HELP IMPROVE CORPORATE EARNINGS AND PURCHASING POWER
BOJ GOV KURODA: FALLING OIL PRICES WILL HELP PUSH UP INFLATION IN LONG RUN BY IMPROVING ECONOMIC ACTIVITY
BOJ GOV KURODA: OUTPUT GAP LIKELY TO CONTINUE IMPROVING AS ECONOMY GROWS ABOVE ITS POTENTIAL 

BOJ GOV KURODA: INFLATION EXPECTATIONS REMAIN INTACT ON THE WHOLE
BOJ GOV KURODA: CHANGE IN PEOPLE’S DEFLATIONARY MINDSET HAS BEEN STEADILY TAKING PLACE
BOJ GOV KURODA: MEETING 2 PCT INFLATION MAY COME EARLIER OR LATER DEPENDING ON OIL PRICES
BOJ GOV KURODA: NO CHANGE TO VIEW THAT THERE IS HIGH CHANCE OF MEETING 2 PCT INFLATION AROUND FISCAL 2015
BOJ GOV KURODA: CONSUMER INFLATION MAY SLOW FURTHER FROM NOW ON DUE TO BIG DROP IN OIL PRICES
BOJ GOV KURODA: BOJ’S TIMEFRAME DOESN’T MENTION WHICH MONTH WE WILL ACHIEVE 2 PCT INFLATION, THERE’S NO CHANGE IN TIMEFRAME 

BOJ GOV KURODA: NO NEED TO CHANGE VIEW THAT INFLATION EXPECTATIONS ARE RISING IN MID- TO LONG-TERM 

BOJ GOV KURODA: NOT CONSIDERING CUTTING INTEREST RATES PAID TO EXCESS RESERVES PARKED AT BOJ 

BOJ GOV KURODA: LOWERING OF YIELD CURVE AS A WHOLE HELPS BRING DOWN REAL INTEREST RATES, BOOSTING INVESTMENTS AND CONSUMPTION 

BOJ GOV KURODA: LOWER BOND YIELDS ARE DUE TO BOJ’S MASSIVE JGB BUYING AND LOWER INTEREST RATES IN OTHER COUNTRIES 

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