Citigroup Sees Dollar-Yen Rebound Ahead of BoJ Rate Decision

Citigroup's FX strategists have recommended buying a call spread ahead of the Bank of Japan (BOJ) rate decision, as they believe the yen's surge on Thursday was due to official intervention.

The dollar-yen currency pair had fallen 2.5% earlier in the day to 159.40, but Citigroup's strategists think it will rebound after the BOJ meeting tonight.

According to Daniel Tobon, senior FX and macro strategist at Citigroup, 'We do not think Governor Ueda will be able to 'outhawk' expectations at tonight's BoJ meeting, which could lead to a disappointment.'

Citigroup has recommended buying the one-month dollar-yen 160.50/162 call spread, which would generate profit from a recovery in the currency pair above 160.50, with maximum gains reached at 162.