RBI Cuts Repo Rate to 5.25% as Inflation Cools and Growth Outlook Strengthens 
BOJ Poised for Historic Rate Hike as Japan Signals Shift Toward Monetary Normalization 
Fed Meeting Sparks Division as Markets Brace for Possible Rate Cut 
Fed Near Neutral Signals Caution Ahead, Shifting Focus to Fixed Income in 2026 
RBA Unlikely to Cut Interest Rates in 2026 as Inflation Pressures Persist, Says Westpac 
ECB Signals Steady Rates Ahead as Policymakers Warn of Inflation Risks 
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.
