BoJ Preview: USD/JPY unlikely to react to an on-hold central bank
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The Bank of Japan (BoJ) is expected to maintain rates on hold at -0.1%, focusing on the yield-curve, as policymakers are awaiting vaccine distribution before reassessing the situation. Meanwhile, USD/JPY has corrected from multi-month lows, but bulls are still reluctant, FXStreet’s Chief Analyst Valeria Bednarik informs.
See – Bank of Japan Preview: Forecast from seven major banks
Key quotes
“The main rate is foreseen steady at -0.1%, while the focus will remain on the yield curve control, which aims to maintain the 10-year JGB yield target at around 0.00%.”
“The coronavirus situation is worsening in Japan. The country reported on Monday roughly 5,000 new contagions, with serious cases nearing 1,000, putting the health system under pressure. In this scenario, the country is awaiting vaccine distribution, announced for February. That said, it seems unlikely that the BoJ would take fresh measures. Instead, policymakers will likely wait until March to reevaluate the situation.”
“It seems unlikely that the pair would show a strong reaction to an on-hold BOJ. Still, if the pair manages to advance beyond 104.40, it could trigger stops and accelerate its advance. The risk will turn to the downside if the pair breaks below 103.50, the immediate support, while a steeper decline should be expected if it extends the slump below 103.10.”
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