JPY: Kuroda in focus again

The Bank of Japan (BoJ)'s Monetary Policy Meeting (Friday) will be the focus of the week. Although no change is expected in the monetary policy, Governor Kuroda's press conference will be closely watched, particularly with regard to the recent yen depreciation, given his comment at the Committee of Financial Affairs last week that JPY REER is very weak and unlikely to weaken further from here. 

Indeed, JPY REER at one point has dropped to the low seen back in last December, suggesting limited downside for the currency. In this regard, his views on the yen weakness (if there is anything new) and the monetary policy outlook will demand some scrutiny. 

On the other hand, the USDJPY has become more sensitive to the US-Japan rate differentials recently; therefore, Wednesday's FOMC and UST/USD dynamics will likely continue to be an important driver of USDJPY in the near term. 

"With regard to economic data in Japan, we expect the May trade balance to post a second consecutive month of deficit at -JPY226bn (consensus: -JPY245bn) after turning to a surplus in March", says Barclays.