Japanese Yen Trend for Next Week

Japanese Yen 

The Japanese Yen finished higher as a noteworthy pullback in the Nikkei 225 pushed the USD/JPY exchange rate to weekly lows. Yet the true fireworks may come on upcoming Bank of Japan and US Federal Reserve rate decisions, while US labor market data may likewise spark big moves in the USD/JPY.

Both the BoJ and the US Federal Open Market Committee (FOMC) are likely to keep monetary policy unchanged through their upcoming decisions. Yet all eyes will turn towards the Bank of Japan’s statements to gauge the likelihood of future policy changes, and investors will similarly scrutinize FOMC rhetoric for any clues on the timing of future interest rate increases.

Japan’s central bank governor Haruhiko Kuroda made it clear that officials do not anticipate the need for further monetary policy easing at the BoJ’s last policy-setting meeting. And indeed it seems unlikely that recent economic data will have shifted the bank’s bias. As such we’ll watch for any reference towards changing economic forecasts—particularly in light of the consumption tax hike put into effect at the beginning of the month.