Watching the yen after BoJ comments, ZARJPY implications
The latest BoJ commentary, while largely maintaining the dovish stance, had a subtle shift in tone that I'm trying to decipher. They're still committed to yield curve control, but the language around inflation seems to be ever so slightly acknowledging some upward pressure. It's not a hawkish pivot, not by a long shot, but enough to make me keep a closer eye on the yen crosses.
Specifically looking at $ZARJPY, which is trading around 9.925 today, up a bit. The carry trade appeal is clear with the rate differential, but any sustained yen strength from even minor BoJ tightening signals could unwind some of that. Not saying it's imminent, but the risk/reward for simply holding long ZARJPY might be getting incrementally less attractive than it was a few months back. Keeping this on the watchlist for any signs of a break below key support, as a potential unwind could be quite sharp.
I'm not sure a subtle shift in tone from the BoJ translates to anything meaningful for the yen, especially with their stated commitment to yield curve control. We've seen similar acknowledgements before without any actual policy changes.