When is the BOJ and how could it affect USD/JPY?

The BOJ concludes its 2-day monetary policy review meeting today, and is widely expected to leave its monetary policy settings unchanged. The BOJ’s yield curve control objective will maintain the short-term policy rate at -0.10% while purchasing the Japanese government bonds at an annual pace of JPY80 trillion.

 The BOJ is expected to offer no surprises and will maintain that accommodative monetary policy will remain in place until 2% price target is achieved. However, what may add to renewed JPY sell-off is the downward revision of core inflation from their current annualized 1.5% figure for 2017 in its quarterly outlook report. The central bank is likely to keep the GDP forecasts largely unchanged.

How could the BOJ affect USD/JPY?

The market has widely expected a no change in the BOJ’s monetary policy stance, while the BOJ quarterly economic outlook report may provide some fresh impetus on the yen. Jim Langlands at FX Charts explains, “the short term momentum indicators have turned to point lower and a sterner test of 111.00 seems possible, below which could see a run towards 110.50 and to 110.35 and even to 110.00 although this seems doubtful at this stage. On the topside, minor resistance will be seen at 111.25 and 111.50 ahead of the session high of 111.77, and 112.00 although again this seems unlikely to be seen today.”

“Given the look of the short term momentum indicators, selling rallies is mildly preferred, but without looking for too much. Use 111.50/110.50 as a guide, with one eye on the BOJ.”

Key notes: 

BoJ preview: policy on hold, could be upbeat on export growth, gloomy on inflation

BOJ to keep its policy stance intact on Thursday - Barclays

 About the BOJ Interest Rate Decision

The BOJ Interest Rate Decision is announced by the Bank of Japan. Generally, if the BOJ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the JPY. Likewise, if the BOJ has a dovish view on the Japanese economy and keeps the ongoing interest rate, or cuts the interest rate it is negative, or bearish.