When is the BOJ rate decision and how could it affect USD/JPY?


Early on Wednesday, around 03:00 AM GMT, the Bank of Japan (BOJ) will provide the decision of its routine monetary policy meeting. The central bank is widely expected to offer no change to its present monetary policy. In doing so, the BOJ will keep the short-term interest rate target at -0.1% and directing 10-year government bond yields toward zero.

However, the quarterly publication of the economic outlook makes the event the key. It’s worth mentioning that the recent escalation of the coronavirus (COVID-19) cases in Tokyo could push policymakers towards adding further downbeat comments in the rate statement. Other than the BOJ action, Governor Haruhiko Kuroda’s speech at 06:00 GMT will also become the key for the yen pair.

Major five banks including TD Securities and Standard Chartered are of the view that the BOJ will again portray a bearish halt to the monetary policy. Though, the appointment of the new monetary policy team head could offer surprises.

Read: BoJ Preview: Five major banks expectations

How could it affect the USD/JPY?

USD/JPY struggles to keep the recent run-up past-107.00 ahead of the BOJ on Wednesday. The pair earlier benefited from hopes of virus vaccine and upbeat earnings but fears of the highest alert in Tokyo questions the bulls. Talking about the monetary policy decision, a lack of major moves could keep the traders looking for details in the rate statement and the second-quarter economic outlook. Hence, downbeat forecasts, which are more likely, can help the pair in refreshing the monthly top. However, any surprise moves might not refrain from offering a knee-jerk reaction to the markets.

Technically, a daily closing beyond 50-day SMA, currently near 107.50, becomes necessary for the bulls to challenge the monthly high of 108.17. Meanwhile, an ascending trend line from June 23, at 106.75 now, becomes the key short-term support.

Key Notes

BOJ Preview: No changes in policy, but forecast downgrades expected

USD/JPY: All eyes on BOJ to extend run-up past-107.00

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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