Central bank divergence confirmed, positive for EUR/JPY/ USD/JPY - Nomura

Analysts at Nomura explained that over the past few months, the G3 central banks’ stance on forward guidance has diverged.

Key Quotes:

"Recently, the G3 central banks’ communications on forward guidance have changed further."

"While the BOJ is still in the early stages of guidance, the ECB is now considering changing its guidance further by providing more detail and the Fed keeps deemphasising the significance of guidance as policy is now closer to normal."

"These divergences still suggest EUR/JPY and USD/JPY outperformance is likely into year-end."

"Governor Kuroda’s comments on possible changes in guidance also suggest forward guidance could be used as an easing option when economic momentum weakens further."