JPY: Trading the BoJ - Views from Major banks

Morgan Stanley: USD/JPY remains a buy the dips. Japan's weekly security flow data confirmed continued bond-related outflows which should persist for now as there are no signs of the BoJ moderating its yield curve management. Improving US financial conditions may see the FED paying attention again to the capital misallocation risk.

BofAML: The BoJ is likely to keep its rates and QE targets unchanged at its 20 July MPM, in line with consensus expectations. Yield upturns accompanied by increased volatility could occur some time in the future even with BoJ's large JGB purchases. JPY is likely to watch politics rather than monetary policy for now.

Credit Agricole: We expect no changes to the BoJ's policy parameters at this week's meeting and looks for the IOER rate to be left at -0.1% and the YCC 10Y JGB target at 0%. While the Central Bank will slightly revise up its GDP forecasts by 10-20 bp in its Economic Outlook report, it will lower its inflation forecasts from 1.4% to 1% for FY17 and from 1.7% to 1.5% for FY18, in order to reflect recent weak inflation readings.

Danske bank: We expect the Bank of Japan to maintain its QQE with yield curve control policy unchanged at its monetary policy meeting. It is widely expected that the BoJ will keep its monetary policy unchanged, especially after it earlier this month demonstrated its strong commitment to yield curve control by announcing an unlimited fixed-rate purchase of 10Y JGB's. The announcement should not have any significant impact on price action.

Source: Bloomberg Pro Terminal

Trader - S. Fuchedzhiev

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