USD/JPY lost more than 100 pips on Wednesday and broke below 129.00. Economists at TD Securities expect the pair to target 120-125 in the next two months.

More change to YCC by the April meeting

“We expect more change to YCC by the April meeting under a new Governor, which is expected to be named next week.”

“What is clear is that Japanese investors will not be able to invest in foreign bond markets on a hedged basis as they have in the past. The cost in doing so is far too punitive. So BOJ policy, alongside with evidence of percolating inflation, will require a change in course, and one that will imply more ownership of JGBs by Japan investors instead of the BoJ.” 

“We continue to see 120-125 as a target in USD/JPY in the next couple of months.”