Sources: BOJ sees no imminent need to roll out more stimulus - Reuters

Reuters quotes sources familiar with the Bank of Japan (BOJ) thinking, as saying that many BOJ officials see no imminent need to roll out more stimulus, especially after the European Central Bank (ECB) held back on immediate easy at its monetary policy meeting held on Thursday.

Key Highlights:

“Some officials worry that the BOJ will appear less dovish if its stands pat at a time when U.S. and European central banks are signaling looser policy. That could trigger a spike in the yen that would put further pressure on Japanese exporters.

For now, with the yen comfortably below the pain point of 100 to the dollar and stock prices stable, the BOJ is seen keeping monetary policy steady at its July 29-30 meeting.

In fresh quarterly projections to be issued at next week’s meeting, the BOJ will likely trim its inflation forecast for the current fiscal year ending in March 2020, sources say.

Meanwhile, some analysts expect the BOJ to tweak forward guidance - or a pledge central banks make on future policy moves - and commit to keeping ultra-low rates longer than it does now. It is also expected to maintain its massive asset buying program.”

The Yen could see a broad rally on a likely BOJ status-quo, as it would disappoint the doves while Fed’s policy decision on next Wednesday, July 31st, could trigger a “Buy the fact” rally in the greenback vs. its main peers, as a 25bps rate is already priced-in by the markets. All-in-all, the risks remain titled to the upside for the USD/JPY pair in the coming days.

At the press time, the USD/JPY pair trades modestly flat near 108.60 region, off the 2-week tops reached in the US last session at 108.75.