USD/JPY: Credit Agricole expects further easing by BoJ this week, recommends long positions

In a note published today, Credit Agricole bank said to expect further easing from the BoJ at its meeting of Friday 30 October:

"Growing downside inflation risks have reduced the likelihood that the BoJ will reach its inflation target on time. Our economists therefore expect the central bank to consider a more aggressive monetary policy by the end of the year.

The BoJ meeting on 30/10 appears to be the most likely timing, as the BoJ will publish its semi-annual update of its economic forecasts. And even if the central bank does not act this week, it will simply be postponed to the next meeting in our view.

We therefore continue to believe that JPY rallies (decline of the USD/JPY) should be sold (purchase of USD/JPY), especially as our economists also continue to anticipate a rate hike from the Fed by the end of the year, which should strengthen the dollar."