Eamonn, David and Mike have been spot on with their recent analysis of the moves. I’d like to add my thoughts about where we go next. I’ve mused previously that there were three main things to focus on in the “big picture”.

  1. Abe getting into power
  2. Abe gets his man into the BOJ
  3. July upper house elections.

The BOJ decision is almost a certainty and is now priced in. The only risk is that Iwata doesn’t get in. The market is still expecting him to get the vote one way or another but there is moderate risk that he won’t and that could send the pair lower. In my view that would present a perfect dip buying opportunity, though I don’t foresee a huge drop on that news.

The next big catalyst will be the July elections. If Abe secures both the upper and lower houses then that makes it much easier to get policy pushed through. This isn’t something that warrants immediate attention from us, but merely to keep in mind.

So what do we do in between? We have to tarde on the here and now. The focus for the pair is now firmly on economic figures (US & Japan) and what the BOJ do. The time for talk is almost over and now they need to put their money where their mouths are. The emergency/special BOJ meeting rumour could give us some surprises and I’m sure the new BOJ head will want to hit the ground running. I’m expecting ranging moves over econ figures with possible large moves coming on surprises from the BOJ. The trend is still up but, short term we may see the same sort of trading range (200-400 pips) that we did through February’s consolidation.