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.

With the absence of quarterly economic outlook, the event has fewer key details to watch except the BOJ Governor Haruhiko Kuroda speaks at the press conference somewhere near 04:30 GMT.

Ahead of the event, TD Securities said,

As Fed easing expectations intensify and central banks globally become more dovish, attention has shifted to BoJ policy. Admittedly the BoJ is more constrained than the Fed in terms of policy room, but their rhetoric has become more dovish. We don’t expect easing anytime soon but the BoJ is likely to sound dovish and could offer some enhanced forward guidance. Kuroda outlined four options in terms of more policy stimulus, with one being a further cut in the deposit rate. However, BoJ would need to outline how they plan to alleviate the pressure on bank profits from such a move.

How could it affect the USD/JPY?

Sluggish data support at home and recently dovish statements from the Governor Kuroda indicate reinforcement to the central bank’s easy monetary policy, which in turn could trigger the decline of the Japanese Yen (JPY). However, JPY’s safe-haven appeal could restrict the quote’s upside amid persistent fears of a global economic recession.

On the technical front, a sustained break of 107.80 holds the key to the quote’s extended downturn towards January 04 low near 107.47 whereas 106.62 and 105.50 could entertain sellers then after. Meanwhile, 108.20 and 21-day simple moving average (SMA) level of 108.67 restricts the pair’s near-term upside, a break of which can extend the recovery towards 108.80 and May 13 low near 109.00.

Key Notes

USD/JPY analysis: bears ready to push it further down

USD/JPY has dropped below the 108 handle as U.S. yields continue to fall

USD/JPY technical analysis: Not even the Fed can break this range

USD/JPY drops to test 108.00 as Fed sends US Dollar to the downside

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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