FXStreet (Guatemala) - Analysts at TD Securities explained that the NZD/JPY offers an attractive risk/reward profile.
Key Quotes:
"While it is a close call, we are not convinced the BoJ will ease given its limited effectiveness on the real economy and the operational constraints associated with providing more stimulus. Importantly, the bid tone in USD/JPY from last week suggests a prevailing market bias for some kind of easing.
Therefore, the hurdle may be high for the BoJ to truly surprise markets at this point. Indeed, an increase in the monetary base target from 80tn to 90tn or 100tn yen is only window dressing in our view. We also think the lack of verbal intervention from Governor Kuroda in recent weeks is interesting.
Recall back in June that the Governor had noted that JPY strength in previous years seems to have corrected and there was little downside adjustment in the REER (which is currently nearly two standard deviations below the long-term average), which we think may have signaled the top in USD/JPY.
Look to short NZD/JPY at 81.50, target 76.50/70 and stop at 83.50. Note that our preferred trade for a no-change BoJ outcome is to short EURJPY."
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