Rate Cuts Tend to be Usd/jpy-Negative

Rate Cuts Tend to be Usd/jpy-Negative


Quotes from Societe Generale Cross Asset Research:
-We note that China's potential injections of liquidity may in theory bode well for risk sentiment, and thus help to put a floor under USD/JPY. Chinese PM Wen Jiabao on Tuesday signalled more room for fiscal and monetary policy to revive growth. The PBoC has not eased monetary policy since July despite significant signs of softening in economic activity. However, we continue to think it may change its mind soon.
-SG Asia economists expect one more 25bp cut in 1Y deposit rates, and 100bp cuts in the reserve ratio requirement in H2 2012. What does past history tell us? Unfortunately it is not that conclusive. If anything, rate cuts tend to be USD/JPY-negative. However, recent history is far less clear, as fears of FX interventions have biased the market impact on USD/JPY.