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Hardy: The key to the yen's next move
It looks as though Japan is moving forward with a big rise in sales tax and that could be a key driver to yen weakness. That's according to Saxo Bank's Head of FX Strategy, John Hardy. He says such a move will hit consumer spending and thus affect the country's economic growth.
As a result, John says it will be interesting to see how the Bank of Japan Governor approaches what he calls "these risks" when the central bank meets. He also thinks that we could see USDJPY reach the crucial 100-level, however, this will not only depend on what Kuroda has to say but also on external factors such as nervousness in emerging markets.
The governor suggested last week that the central bank could ease policy if the economic outlook worsened. In April, the BOJ launched massive stimulus by pledging to nearly double the monetary base to 270 trillion yen by the end of next year, in order to achieve its 2 per cent inflation target.
The Bank of Japan starts a two-day policy on Wednesday and is expected to keep policy on hold.
01:26 minutes
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