When is the BOJ rate decision and how could it affect USD/JPY?
|Early on Thursday, the Bank of Japan (BoJ) will conclude its latest monetary policy meeting approximately at 2:00 GMT. The central bank is widely expected not to announce any changes in its key policy actions by holding short-term interest rate target at -0.1% and keep directing 10-year government bond yields toward zero.
However, crucial to the Japanese Yen (JPY) traders will quarterly outlook report and comments from the Governor Haruhiko Kuroda during a press conference after the rate statement.
TD Securities expect a downgrade to growth and inflation as they said:
The Bank of Japan will meet, where we share the consensus view that all operational targets will remain unchanged. We will be keyed in on a more thoughtful discussion about financial stability risks however, as this has gained traction in recent months and the latest dealer survey has shown an appreciable deterioration in JGB conditions. The updated Outlook Report should show another downgrade to growth and inflation, where the latter is at risk of not returning to target within the BOJ's forecast horizon.
Alternatively, Societe Generale signals BOJ will hold its positive economic assessment unchanged. They further said:
The BoJ policy board will likely decide to maintain its current monetary easing framework at the April monetary policy meeting on 24-25 April. In the new outlook report, the policy board will likely maintain its positive assessment of Japan's underlying economic strength, while continuing to be cautious of the recent weakness in economic data.
How could it affect the USD/JPY?
Despite recent improvements in Japan data, the Asian economy is still far from the central bank's optimistic targets for which questions have already been raised. With this, Governor Kuroda might be forced to be a bit dovish and the same can be inferred from quarterly outlook report. As a result, the USD/JPY is more likely to witness a short-term upside if the central-bank sounds weak in their report and communication from the Governor. However, JPY’s safe-haven appeal could restrict the quote’s upside afterward.
Technically, the USD/JPY pair is heading towards 112.55 resistance level with 113.20 and 113.70 in focus afterward. Should the pair declines, 112.00 and 200-day simple moving averages (SMA) near 111.50 seem important for sellers to watch.
Key Notes
USD/JPY resting up at broken territory (112.00/20) ahead of BoJ
USD/JPY analysis: yen weakens further ahead of BOJ
About BoJ Rate Decision
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.
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