Citi asks how negative unlimited QE could be for JPY noting recent comments from the head of LDP who is favourite to become the new PM suggest pressure will be put on the BOJ to adopt such a stance. "In theory unlimited easing should be JPY-negative as it boosts the supply of the currency and debases it in the process," says Valentin Marinov. But recent price action of USD and CHF, both of which pledged to ease policy for as long as it takes didn't actually yield long-term currency weakness. For sustained weakness in the JPY, firm efforts by Japanese officials will be needed to cheapen their currency. Alongside an improving global outlook which encourages Japanese investors to sell JPY against other higher yielding currencies. Lastly, a "strong USD supported by cyclical tailwinds from less dovish Fed," will be needed. USD/JPY currently trades at 80.990.
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