BOJ Goes Negative In Surprise Move

Published 01/31/2016, 07:57 AM
Updated 05/14/2017, 06:45 AM

The Bank of Japan (BoJ) this morning introduced negative rates with a three-tier system by the lowest possible majority, the QQE programme was left unchanged.

We stress that the signalling value that the BoJ is not done easing is more important than the actual rate cut which is marginal, we cannot rule out further cuts into negative terrain but the market is already pricing this in to some extent.

We expect the decision to boost global risk sentiment in the coming days but crucially we do not see this as a trigger of a prolonged global risk rally.

USD/JPY risks have clearly become skewed to the upside, but we do not expect the cross to test last year's high. Clients should take advantage of dips in USD/JPY or EUR/JPY to position for new upticks which could notably come from a repricing of the Fed - and possibly the ECB - in a more hawkish direction.

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