Bank of Japan Accounts (April 20)

What the desk is arguing

The desk argues that the BoJ's asset composition indicates a sustained commitment to supporting the economy through government bond purchases, which may keep the yen under pressure. The substantial ¥531 trillion in Japanese government securities underscores the central bank's reliance on these assets to stimulate growth, as noted in the latest BoJ accounts.

Additionally, the BoJ's foreign currency assets stand at about ¥11.7 trillion, which could be leveraged for further interventions if necessary. This strategy aligns with the ongoing Loan Support Program, which has disbursed nearly ¥49 trillion to bolster economic foundations, reflecting the central bank's proactive stance.

Where it sits in our coverage

Our consensus target for USD/JPY is 1.075, with a range of 1.04 to 1.12. Notable firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26) - citi: 1.12 (Mar26)

This view aligns closely with jpmorgan, which shares a similar outlook on the yen's trajectory, while bofa presents a more bearish stance, suggesting divergence in expectations regarding the BoJ's policy effectiveness.

How other firms see it

Firms aligned with our view, such as jpmorgan and citi, anticipate a weaker yen driven by the BoJ's expansive asset purchases. Conversely, bofa holds a contrary position, forecasting a stronger yen as they expect a shift in monetary policy sooner than others predict.

The trajectory of USD/JPY will be closely tied to upcoming economic data releases, particularly the GDP growth rate and balance of trade figures, which could influence market sentiment towards the yen and the BoJ's future policy decisions.

What the calendar says

With the GDP growth rate and balance of trade data set for release on May 19 and 21, respectively, these events could serve as critical catalysts for market movements. Traders should remain vigilant for any surprises in these figures, which may prompt a reassessment of the yen's outlook against the dollar.