Wells Fargo Asia Pacific chief strategist Chidu Narayanan said two dissenting
votes at the Bank of Japan were not unexpected and those members are likely to
remain dovish through the remainder of the tightening cycle. He said the
dissents should have limited market impact. Wells Fargo expects a gradual BOJ
hawkish tilt, Japanese Finance Ministry intervention threats and potential
pension-fund rebalancing to jointly anchor USD/JPY around 155-160. With rising
global energy prices and only a modest Fed tightening cycle, a material yen
rally would require far more aggressive BOJ action than appears likely. USD/JPY
range-bound trading is the bank’s base case for the coming months.
