RBS analysts comments on the USD, yuan, the Bank of Japan & yen.
On the USD and the yuan:
- This week Federal Reserve rate hike expectations fell further, the People's Bank of China set the onshore yuan's fixing rate tightly each day and the yen stayed firm across the board
- We think it's too early for the Fed to start trimming its path of monetary tightening and expect very strong capital outflows from China to lead to renewed yuan weakness
- We thus keep our bullish dollar and bearish regional Asian and commodity currency views
On the BOJ and the yen:
- In contrast, we are more concerned about our longstanding bullish view on the yen
- In the week ahead the Bank of Japan releases its regional economic report
- For the first time all 32 of its branches will survey firms' salary plans
- A weak report would increase the risks of a surprise BoJ move at the end of January as Governor Kuroda has consistently warned wage growth needs to rise
- Further, last year's strong consensus for more easing has shifted back to April at the earliest
- With very few analysts expecting any BoJ action this month, Kuroda has the opportunity to surprise the markets as he did in April 2013 and October 2014
Bolding is mine
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The Bank of Japan meeting is on January 28 and 29. All indications from Kuroda is for no further action at present. So, yeah, a move would be a surprise.
