BoJ may tweak its operations again; no major policy changes

The BOJ is expected to leave its major policies unchanged at the meeting on August 8-9, unless USDJPY declines substantially, says Nomura strategist Yujiro Goto. "We think the Bank may tweak its operation slightly again to make its JGB buying operation easier" he said. This time, two new board members, Mr. Sato and Mr. Kiuchi, will attend the meeting for the first time. "If either or both of the new board members dissent against the governor, USDJPY would likely rise, but only until the market realizes that one or two dissents are unlikely to lead to any imminent radical policy shift" Mr. Goto notes. Nonetheless, "the new board members‟ inflation forecasts are likely to be more pessimistic and, thus, we think it worth watching for any changes to the BOJ's economic and inflation assessments" Nomura strategist adds. Keep an eye on any discussion about BOJ foreign bond buying too, Mr. Goto concluded.

In the European session ahead, the June UK Industrial Production and Manufacturing data will be risk event for GBP, due for release at 08:30 GMT. Later in the day, the National Institute of Economic and Social Research GDP Estimate is scheduled for release at 14:00 GMT.



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