JPY: BTMU says yen should go back up as BoJ is lacking options

BTMU believes that the Thursday morning BoJ meeting will have a bullish impact on the JPY on the forex.

"While the Fed will express caution about rate hikes Wednesday, immediately afterwards the BoJ might be perceived as being cautious about further easing. While a few weeks ago the expectations for significant monetary policy statements were high, they have somewhat reduced since then.

We continue to believe that the BoJ will maintain a wait-and-see position Thursday, while ensuring that easing monetary policy options remain. The reports show that the MPC is not in agreement with Governor Kuroda and his Vice-Governor, who are in favour of more rate cuts while others still believe in the expansion of the monetary base through asset purchases.

Our feeling is that market expectations for a reversal from a fixed asset purchase target is more likely, but ultimately, a Wednesday decision to keep policy unchanged will simply reinforce market sentiment that the BoJ lacks options, and the short-term response will be an increase of JPY levels on the forex."