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


Early on Thursday, 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 recovery from the coronavirus (COVID-19) in Tokyo could push policymakers towards adding upbeat comments in the rate statement to please the fresh PM Yoshihide Suga. Other than the BOJ action, Governor Haruhiko Kuroda’s speech at 06:00 GMT will also become the key for the yen pair.

Ahead of the event, TD Securities said,

BoJ continues to implement its current array of policy measures but is unlikely to add to them. Pressure has arguably lessened, with Q3 activity picking up and the second wave of virus cases receding. As such, BoJ is likely to upgrade its economic assessment, albeit modestly, while continuing to highlight downside risks. Attention will focus on the LDP's vote on party leader.

On the same line, FXstreret’s Chief Analyst Valeria Bednarik said, “the BOJ has little chances of having an impact on the JPY, but the same doesn’t go for the Fed. The US Central Bank will likely set the tone ahead of the Japanese one. A strong static support area comes around 104.70, with a  break below it exposing 104.18, this year low.”

How could it affect the USD/JPY?

With the Fed’s art of conveying a dovish outlook with a hint of no immediate action, the BOJ may also follow the suit. The Asian major can also cite the recent recovery in economics to upwardly revise the forecast and gain praise from PM Suga. If so happens, the USD/JPY prices may continue declining towards July 31 low of 104.18. It’s worth mentioning that the pair currently snaps a three-day losing streak to take the bids around 105.15.

Technically, August month’s low of 105.10 offers immediate resistance to the pair buyers ahead of the 50-day SMA level near 106.15. Until then, bears are likely to keep the reins.

Key Notes

USD/JPY seesaws around monthly low ahead of BOJ

BOJ Preview: New Prime Minister, same old policy

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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