- Haruhiko Kuroda, BoJ Governor
Last week's comments from the Bank of Japan provoked a massive sell-off of USD/JPY, as investors rushed to buy the Yen following the BoJ meeting, where policymakers said no additional easing was on the schedule. On Friday, however, the Dollar regained some of the earlier lost positions, climbing 0.18% against the Yen after upbeat producer prices and consumer sentiment.
While Kuroda tried to make it clear the central bank is comfortable with the current stance of the monetary policy and they are ready to act if necessary, there are some worrying signs that are raising concerns the Governor still have some doubts. This month the Governor will revive his regular meetings with the Prime Minister Shinzo Abe, according to people familiar with the matter. It means that the government can be concerned about the recent stock market declines and the strengthening of the Yen. Kuroda has been, perhaps, overconfident about the current economic conditions, as some reports suggested the economy was not ready to withstand the tax hike. Shinzo Abe's cautiousness, however, add to speculation we can see more actions soon. The Japanese Yen advanced 3.4% this year, while Tokyo stocks retreated 14% after rocketing 50% last year. Such a performance suggests investors are concerned that falling consumer confidence will derail the economic recovery, while tax hike will leave them with less cash to spend.
© Dukascopy Bank SA