China re-opening and moderation in gas prices have improved the global growth outlook and reduced the recessionary tail. Add to this the easing in financial condition and rising real disposable incomes, with inflation moderating, and we are likely more in cruise control than deceleration mode.

The post-BoJ debate has predictably started among Tokyo center banks. Some think it’s increasingly likely to continue with its solid easing stance until the end of Governor Kuroda’s term (early April). On the flip side, others think the statement opened the door to yield-curve control change in the future. While from a trader’s perspective, the latter is a given, however with the BoJ easy stance intact, it suggests USDJPY will trade more sensitive to US interest rates again. However, given the merits on both sides of the debate, I suspect JPY moves will be contained until the end of the month when the FOMC carries the USD baton into the policy meeting Feb 1

Published by Stephen Innes, Managing Partner, SPI ASSET MANAGEMENT