USD/JPY testing 200 DMA – RBS

FXStreet (Guatemala) - Strategists at RBS noted that the with USD/JPY testing the 200-day moving average for a second day, the Bank of Japan decision is due tonight.

Key Quotes:

“The fairly neutral comments from the BoJ, paired with a stronger than anticipated growth pace in the first quarter, likely point toward an unchanged stance from the Bank of Japan”.

“The Bank does not yet have a national CPI print for April, the first month since the consumption tax hike was put in place. That may make action at this week's meeting even less likely”.

“While the stronger than anticipated GDP print for the first quarter was in part driven by a pull-forward in consumption, the underlying make up of growth away from consumption was still fairly positive, including a strong gain in private sector capital investment. Our economics team has revised up their growth forecast for Japan to 1.1% y/y for FY 2014 from 0.5%”.

“The latest trade data will be released for April as well and a slowdown in imports, likely linked to a slowdown in consumer demand after the tax hike, may reduce the trade deficit”.