• govt delay in sales tax hike has decreased Fitch’s confidence in Japan’s commitment to fiscal consolidation
  • unlikely to consider more than a one notch downgrade
  • if Japan can lower budget deficits by the time BOJ unwinds QE then debt ratios can come down
  • high domestic ownership of govt debt is a funding strength for Japan

Fitch gives notice of its intentions

USDJPY 118.06 after earlier rally to session highs of 118.39 gave way to general USD-neg tone