USD/JPY remains bid as BOJ downgrades Japan's growth forecasts
|- USD/JPY keeps gains as BOJ downgrades 2020-2021 GDP forecast.
- The central bank reiterates willingness to provide more stimulus, if required.
- The uptick in the S&P 500 futures help USD/JPY carve out gains.
USD/JPY continues to trade in the green with the Bank of Japan (BOJ) revising growth and inflation forecasts lower and keeping interest rates unchanged as expected.
The central bank maintained the policy balance rate at -0.1% and retained the 10-year Japanese government bond yield target at about 0%, but downgraded the consumer price index (CPI) inflation forecast for the current fiscal year (April 2020 to March 2021) to -0.6% from -0.5%.
However, the bank sees inflation rising to 0.4% in the next fiscal year compared to the previous estimate of 0.3%.
Further, BOJ sees gross domestic product (GDP) contracting by 5.5% in the current fiscal year versus the previous forecast of -4.7% and upgraded growth forecast for the next fiscal to 3.6% from 3.3%. The bank added that it would take additional steps [stimulus] if needed.
So far, the BOJ's rate decision and economic forecast have not had a notable impact on USD/JPY, possibly because the bank is unlikely to alter stimulus program anytime soon.
Besides, the focus right now is on the broader market sentiment. At press time, the futures tied to the S&P 500 signify risk reset with a 0.88% and help keep the yen bulls at bay. As such, USD/JPY is flashing green at 104.50. The pair may turn lower if the stocks resume Wednesday's coronavirus-induced sell-off.
Technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.