A BoJ Amamiya nomination could be bearish for then Yen

Bloomberg has reported that should Masayoshi Amamiya become the next Bank of Japan governor, it would be bullish for bonds and weigh on the yen and local financial stocks, according to market participants.

The report explained that ''strategists and economists focused on Japan expect investors may need to recalibrate their expectations for policy adjustment if Amamiya is confirmed. The Nikkei reported that the current deputy governor was approached by the government for the role, a choice that would be seen as likely to extend the central bank’s ultra-easy monetary policy.''

''The shock December decision to tweak yield-curve control illustrated the shockwaves that any hint of BOJ policy change can trigger, sending the yen and Japanese yields soaring and Treasuries lower. Traders pricing in an early withdrawal of stimulus could pull those wagers if they expect a delay to any policy tweaks. The yen retreated in early trading on the reports,'' the article explained. 

Meanwhile, the next BOJ chief will face the delicate task of normalising ultra-loose monetary policy, which is drawing increasing public criticism for distorting market function. The government's nominees will be presented to parliament later this month.

USD/JPY update

USD/JPY is on the way to the opening gap but remains on the backside of the prior bearish trend so the bias is to the upside with the 132.80s eyed.