Monetary Base (Apr.)

What the desk is arguing

The desk argues that the Bank of Japan's monetary base data for April reinforces a dovish monetary policy, suggesting continued support for economic recovery. Per the full note source, this ongoing expansion of the monetary base is likely to weigh on the JPY, as it signals the central bank's commitment to maintaining liquidity in the market.

The latest figures show that the monetary base has increased, reflecting the BOJ's strategy to stimulate growth. This aligns with the broader narrative of Japan's economic recovery, which remains fragile despite recent improvements in key indicators.

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 targets from other firms include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)

This view is consistent with the cross-firm consensus, where the desk's target sits at the upper end of the range, reflecting a more optimistic outlook on USD strength against the JPY.

How other firms see it

Firms like jpmorgan and citi are aligned with our view, anticipating a weaker JPY as the BOJ maintains its accommodative stance. Conversely, bofa holds a contrary position, projecting a stronger JPY based on expectations of a potential policy shift.

Traders should also keep an eye on the USD/JPY dynamics, as the trajectory of this pair is closely tied to the BOJ's monetary policy decisions and upcoming economic data releases.

What the calendar says

With the GDP Growth Rate and Gross Domestic Product figures set for release on May 19, these upcoming events will be crucial in shaping market expectations around the JPY. The data could either reinforce or challenge the current narrative of monetary expansion, making it essential for traders to stay informed.