South Korea Central Bank Signals Cautious Policy Amid Inflation and Middle East Tensions 
Bank of England Set to Hold Interest Rates as Inflation Risks and Iran War Impact Loom 
Bank of Japan Signals Potential Rate Hike as Inflation Risks Rise Amid Energy Shock 
Goldman Sachs Delays Fed Rate Cut Forecast to 2026 Amid Rising Inflation Concerns 
Eurozone Recession Risks Rise as Middle East Conflict Threatens Growth, ECB Official Warns 
Japan Inflation Expectations Rise as BOJ Rate Hike Timing Faces Uncertainty 
As per the Abenomics, which eyes on fresh fiscal easing, made possible by the fact that the BOJ has already bought a decent chunk of the government’s debt. That edges Japan closer to central-bank financed fiscal policy and raises the stakes – for the economy and the currency.
The capital outflows referred to above will remain JPY negative until at least mid-2016. And this figure does not include other public pension funds that follow GPIF and have only just started reallocating
If this latest throw of the dice delivers a sustainable acceleration in growth, the yen has scope to recover further, but the jury’s out.
However, the balance of payments data show significant long-term capital outflows from Japan, which suggest that the yen’s bounce, at these levels, is overdone.
As a result, we could foresee the USD/JPY to claw its way back above 110 in the coming months.
The Bank of Japan remains concerned by yen strength and could prevent a move below 100.
Since 1-3m IVs in this pair seems to be considerably spiking, the leveraged call spread can be deployed in FX portfolios saying thanks to high 2m volatility.
