The Bank of Japan has called for the Japanese government to step up on its reform campaign. Nizam Idris, Head of Fixed Income & Currency Strategy at Macquarie, discusses how this will move the dollar-yen trade.
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Phyllis Papadavid, senior global FX strategist at BNP Paribas CIB, says the Bank of Japan will look to push the yen lower to help the country's economy, making long dollar/yen an attractive trade.
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Derek Halpenny, European head of global currency research at Bank of Tokyo-Mitsubishi, says markets will become "a lot more sensitive" to announcements from the Bank of Japan in 2014.
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The Bank of Japan will consider easing monetary policy further, possibly at an emergency meeting before next month's rate review, if further rises in the yen push down Tokyo stock prices enough to hit business sentiment, sources said.
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The Bank of Japan is expected to ease monetary policy at a rate review on Thursday that was cut short to one day after Tokyo intervened in the currency market to weaken the yen, a source familiar with the central bank's thinking said.
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The Bank of Japan will act flexibly and decisively with an eye on how rises in the yen, among other factors, are affecting the economy, a deputy BOJ governor said, signalling the bank's readiness to ease monetary policy further if the country's recovery comes under threat.*
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