AUD has been strengthening against the yen all year, spiking above ¥105 in the days after the announcement, but has been tracking lower ever since. However, the theme for the yen going forward is depreciation.
''When the BoJ last did QE in 2001, and carried out FX intervention in 2003 and 2004, we saw a doubling of capital outflows from Japan,'' says Javier Corominas, head of research at Record Currency Management. "If we see a similar pattern of behaviour this time, outflows could be even more significant given the size of QE announced and thus we would expect to see further yen weakening".
"We believe commodity currency currencies should hold up against the yen for now. From a more longer term perspective, some yen appreciation against these currencies is possible if China slows down further''
Corominas says demand for commodities from China will slow as a cheaper Yen effectively "steals" some growth from China and neighbouring countries in the region.
"That said, if this has not yen been priced in already, we may see some weakness in commodity currencies coming sooner rather than later,'' he adds.
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