BNP Paribas on the G7 meeting
G7 central bankers and finance ministers gather for a two-day meeting in Japan. The G7 no longer routinely issues post-meeting communiques. We would expect plenty of comments from the side-lines, with US officials likely to continue to emphasize the need to avoid competitive devaluation.
However, the G7 has long acknowledged scope for members to take whatever domestic monetary policy measures are necessary for their domestic economies, and Japanese officials are likely to continue to stress capacity to deliver additional easing and to intervene if necessary to deal with disorderly FX markets. We think direct intervention remains unlikely, but the BOJ is likely to ease further in June, in contrast to steady policy through the summer from the ECB. ECB council member Cœuré noted the central bank has no plan to cut the deposit rate further.
In line with this view, BNPP remains positioned for EURJPY upside via options structure.
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