Goldman Sachs: We expect BOJ to tweak YCC this week, but see limited JPY rally

<p>Goldman Sachs expects the Bank of Japan (BoJ) to
make adjustments to the Yield Curve Control (YCC) at their upcoming
meeting. However, the bank foresees a limited appreciation of the Yen
following this adjustment, attributing the potential restraint to
non-recessionary US growth, a backdrop of lower rate volatility, and
anticipated reversal of cuts priced for the Federal Reserve over the
next year.</p><p>Key Points</p><ol><li><p>BoJ YCC Adjustment: Goldman Sachs predicts that the Bank of Japan will make adjustments to the Yield Curve Control at its forthcoming meeting.</p></li><li><p>Limited JPY Appreciation: Despite the potential policy adjustment, the bank anticipates only a modest appreciation of the Yen.</p></li><li><p>Macroeconomic Forecasts: Goldman's broader macro
forecasts indicate that the market sentiment will likely be buoyed by
non-recessionary US growth and reduced rate volatility.</p></li><li><p>Fed Rate Cuts: The cuts that are currently being
priced for the Federal Reserve over the next year are expected to be
reversed, further impacting the potential movement of the Yen.</p></li><li><p>Requirement for Significant JPY Rally: A more
pronounced rally of the Yen would require a substantial policy shift by
the BoJ, such as moving towards ending the Negative Interest Rate Policy
(NIRP).</p></li></ol><p>Summary</p><p>Goldman Sachs anticipates that the Bank of Japan will adjust the
Yield Curve Control at their upcoming meeting. Nevertheless, the bank
predicts only a limited appreciation of the Yen in response to this
move. This restrained outlook is attributed to Goldman's broader
macroeconomic forecasts, which suggest non-recessionary US growth,
reduced rate volatility, and a potential unwinding of anticipated
Federal Reserve cuts over the coming year.</p><p>For bank trade ideas, <a href="https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD" rel="nofollow" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&amp;source=gmail&amp;ust=1690306658409000&amp;usg=AOvVaw014_d-gVxEolptLJiSOQa4">check out eFX Plus</a>. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. <a href="https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD" rel="nofollow" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://plus.efxdata.com/ad/track/4655172E54F06040571CD0AB083845AD&amp;source=gmail&amp;ust=1690306658409000&amp;usg=AOvVaw014_d-gVxEolptLJiSOQa4">Get it here</a>.

</p>

This article was written by Adam Button at www.forexlive.com.