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. Following the rate decision, BOJ Governor Haruhiko Kuroda will attend the press conference, around 06:00 AM GMT, to convey the logic behind the latest policy moves.

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% while directing 10-year Japanese Government Bond (JGB) yields toward zero. It should also be noted that the central bank’s fourth-quarter (Q4) economic outlook report will also be important to watch.

Ahead of the event, TD Securities said, “The Bank of Japan meeting should be a rather quiet one with no changes to policy though there is a small chance that the Bank chooses to enhance access to credit. With this being an update meeting, we expect the BOJ to provide a downgraded view to the economic outlook as Covid cases worsen.”

On the same line, FXstreret’s Chief Analyst Valeria Bednarik said, “It seems unlikely that the pair would show a strong reaction to an on-hold BOJ. Still, if the pair manages to advance beyond 104.40, it could trigger stops and accelerate its advance. The risk will turn to the downside if the pair breaks below 103.50, the immediate support, while a steeper decline should be expected if it extends the slump below 103.10.”

How could it affect the USD/JPY?

USD/JPY stays heavy near two week low of 103.44, flashed the previous day, during the early Thursday, ahead of the BOJ event. Given the US dollar weakness be the major reason behind the latest USD/JPY downside, coupled with a few expectations backing any moves from the BOJ, the quote is less likely to respond to the bank’s inaction. However, the economic outlook report and comments from Governor Kuroda will be important to watch.

While BOJ’s ultra-easy mood should keep the Japanese yen offered, coupled with the recent market optimism, the US dollar’s safe-haven nature may disappoint USD/JPY buyers except for a knee-jerk market reaction, that too in case of noticeable catalysts from the BOJ.

Technically, a downward sloping trend line from July 01, at 104.00 now, directs the USD/JPY sellers toward the monthly low, also the lowest since March 2020, around 102.60.

Key Notes

BOJ Preview: Policymakers to remain focused on the economic comeback

USD/JPY Price Analysis: Bulls denied, weekly bullish W-formation still in play

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.