Early on Monday morning in Asia, 23:50 GMT on Sunday for the rest, the Bank of Japan (BOJ) will release monetary policy minutes of its latest meeting. With the recently downbeat economic outlook in the quarterly forecast, traders will look for surprises in the details, if any. It’s worth mentioning that Japan’s June month trade data are also scheduled for release with the BOJ minutes and are worth watching for. Forecast suggest the headline Merchandise Trade Balance Total recede from ¥-833.4 B to ¥-35.8 B. Further, Imports and exports are also expected to recover from -26.2% and -28.3% to -16.8% and -24.9% respectively.
Will the minutes’ statement support BOJ’s status quo?
Most market consensus favors the BOJ minutes to become a non-event considering the central bank’s readiness to ease the monetary policy. Though, any major differences between the policymakers considering the easy monetary outlook could signal a shift in the Japanese bank’s future actions.
In his post-monetary policy meeting press conference, Governor Haruhiko Kuroda said, “Various measures are available for further easing including interest rate cuts.” The same makes the case of today’s event even more important.
How could it affect USD/JPY?
While recent risk-off has more to do with the USD/JPY pair than the BOJ Minutes, considering the already taken place BOJ and statement from Governor Kuroda, only a big surprise from the outcome could lead to any major moves of the pair.
Technically, the yen pair drops to 107.05 during the pre-Tokyo Asian session on Monday. With this, the quote remains below 50-day SMA, currently around 107.48 while staying above the monthly low near 106.60. Hence, the pair’s pullback may recall the sub-107.00 area but further weakness becomes doubtful unless the bears refresh the monthly low. Meanwhile, an upside clearance of 50-day SMA will have to sustain past-108.00 to question July 01 top near 108.15.
About BOJ Monetary Policy Meeting Minutes
The Bank of Japan publishes a study of economic movements in Japan after the actual meeting. These meetings are held to review economic developments inside and outside of Japan and indicate a sign of new fiscal policy. Any changes in this report tend to affect the JPY volatility. Generally speaking, if the BoJ minutes show a hawkish outlook, that is seen as positive (or bullish) for the JPY, while a dovish outlook is seen as negative (or bearish).
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