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Forex Flash: Policy mix for structural reform in ´Abenomics´ - BTMU

Takahiro Sekido, Japan Strategist at the Bank of Tokyo Mitsubishi UFJ suspects that policy mix ahead could build the foundations for structural reform as ´Abenomics´ takes hold of the Japanese economy.

He is expecting that the BoJ will change its monetary expansion format plan to monthly basis figures, with the reason that the next governor should report his achievements to the Council of Economic and Fiscal Policy (CEFP) on a quarterly basis. Once the next governor changes the policy stance to be more accommodative, then he can flexibly change and fine-tune the policy settings.

He notes that the recent yen depreciation set the fastest pace of the 2000s and against the present depreciated level of the yen, he does not expect that the next governor will present an idea to implement a joint fund to purchase foreign bonds, even though that is in line with the manifesto of the LDP. However, he feels that in the growth strategy to be released in June, the government would like to support the Japanese corporate sector so as to enhance its potential growth capacity not only in the domestic market but also overseas.

The BoJ’s newly launched fund, the Loan Support Program (LSP) to support Japanese banks’ lending activities will support overseas investments based on real business demands. Sekeido notes that the first auction of the LSP will be held in June. He writes, “The LSP will be one of the pieces in the growth strategy of the Abe administration, we expect. It will be a symbol of the cooperative relationship between the government and the BoJ. The CEFP is supported by the bureaucrats of METI. The concept and integration will be matched with the brainpower of CEFP, we expect.”

Forex Flash: GBP may be in a technical, but temporary, recovery – BBH

Global Head of Currency Strategy at Brown Brothers Harriman, Marc Chandler notes that Sterling has been the whipping boy of the market this year, worsened only by USD and JPY in weakness.
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Forex Flash: GBP/USD may rebound to 1.5913 before resuming downtrend - Commerzbank

Having eroded the accelerated downtrend and reached the 20 day ma at 1.5811, Commerzbank analysts believe the GBP/USD may extend the rebound from 1.5642 (2009-2013 uptrend) even further: “The Elliott wave count on the daily chart is suggesting that we allow for the possibility of a deeper retracement towards 1.5913 and possibly 1.6000, the 38.2% and 50% retracements of the move seen this year. However we then look for failure and a retest of the trend line”, wrote analyst Karen Jones, favoring a break below here to 1.5271/35 (2012 low) in the longer term.
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