Introduction:
The Bank of Japan’s Governor Kuroda recently ended his tenure with no surprises, leaving the focus on the upcoming Nonfarm Payrolls report. Economists at TD Securities expect the USD to take the lead with a strong report, potentially pushing USD/JPY to 140. In this article, we will delve deeper into the recent developments at the Bank of Japan and the potential impact of the Nonfarm Payrolls report on the USD/JPY pair.
Kuroda Leaves BoJ with No Surprises
The Bank of Japan’s Governor Kuroda recently wrapped up his final meeting with no surprises. He left all policy tools unchanged, but economists at TD Securities believe that a future adjustment to Yield Curve Control (YCC) remains likely under Ueda, who is set to take over. TD Securities expects Ueda to order a policy review early on, which could serve as a platform to make changes to YCC as early as Q2.
Impact on USD/JPY
According to TD Securities, USD/JPY at +137 should be key resistance ahead of the NFP report. The ball is currently in the USD’s court, and a strong NFP report could potentially push USD/JPY to 140. However, if the report falls short of expectations, it could lead to a drop in USD/JPY.
Impact on Cross/JPY
TD Securities expects to see more insulation on cross/JPY due to strong US data potentially rocking all boats, but especially the dollar bloc. They believe a re-test of 95/96 in CAD/JPY seems reasonable, particularly as the CAD looks rather vulnerable to the USD with 1.40 now within sight.
Conclusion
In conclusion, Kuroda’s final meeting as Governor of the Bank of Japan delivered no surprises. The focus has now shifted to the upcoming Nonfarm Payrolls report, which economists at TD Securities believe could potentially push USD/JPY to 140. However, the impact of the report on cross/JPY remains uncertain. We will have to wait and see how the report plays out and how it affects the forex market.
