USD/JPY – Yen Subdued Ahead of BoJ Rate Announcement

The Japanese yen is showing little movement at the start of the week. In Monday’s North American session, USD/JPY is trading at 110.83, up 0.02% on the day. On the release front, the Bank of Japan will announce its interest rate later on Wednesday. The Bank is expected to maintain rates at -0.10%. Investors will be carefully monitoring the Bank’s monetary policy statement. There are no US releases on the schedule. On Tuesday, the US releases the Richmond Manufacturing Index.

The Bank of Japan is not expected to make any dramatic moves at its policy meeting, which concludes on Wednesday. Still, there has been speculation that the BoJ could change its monetary stance and taper its massive stimulus program. The economy showed considerable improvement in 2017, and inflation has moved higher, although it remains well below the BoJ’s target of around 2 percent. Still, the Bank made no change to policy last year, and any moves are likely to be small and incremental. Investors will be combing through the monetary statement, and any hints at a change in policy could have a  strong impact on the yen.

It’s Day Three of the US government shutdown, which began Friday at midnight when the Senate failed to approve a short-gap spending bill. Without funding, many non-essential government services have been forced to shut down. Democrats and Republicans are now playing the ‘blame game’ and pointing fingers at who is responsible for the crisis. The Democrats refused to vote for the spending measure until a deal is hammered out over Daca, an program for children who are illegal immigrants that Trump has threatened to deport. Lawmakers are scrambling to reach common ground, and on Sunday, Senate majority leader, Mitch McConnell suggested that he would allow a vote on immigration reform in February if Democrats agree to fund the government. With congressional elections looming, both parties will not want to anger voters, so we could see the crisis resolved this week.

 

USD/JPY Fundamentals

Monday (January 22)

  • Tentative – BoJ Monetary Policy Statement
  • Tentative – BoJ Outlook Report
  • Tentative – BoJ Policy Rate. Estimate -0.10%
  • 23:30 Japanese All Industries Activity. Estimate 0.9%

Tuesday (January 23)

  • 1:30 BoJ Press Conference

Tuesday (January 23)

  • 10:00 US Richmond Manufacturing Index. Estimate 19

*All release times are GMT

*Key events are in bold

 

USD/JPY for Monday, January 22, 2018

USD/JPY January 22 at 11:40 EDT

Open: 110.81 High: 110.92 Low: 110.53 Close: 110.83

 

USD/JPY Technical

S3 S2 S1 R1 R2 R3
108.21 109.11 110.10 111.53 112.57 113.55

USD/JPY edged higher in the Asian session. The pair has posted limited movement in the European and North American sessions

  • 110.10 is providing support
  • 111.53 is the next resistance line

Current range: 110.10 to 111.53

Further levels in both directions:

  • Below: 110.10, 109.11 and 108.21
  • Above: 111.53, 112.57, 113.55 and 114.59

OANDA’s Open Positions Ratios

In the Monday session, USD/JPY ratio is showing long positions with a majority (62%). This is indicative of trader bias towards USD/JPY breaking out and moving lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.