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The BOJ is up this week, folks! What can you expect from the event? More importantly, how might the yen react?

BOJ’s policy decision (Jul 30, Asian session)

One of the biggest stories for the yen this week is the Bank of Japan (BOJ) sharing its monetary policy decision for the month of July.

With the ECB signaling further easing last week and the Fed expected to cut its rates later this week, the pressure is on for BOJ members to not appear at least as dovish as the other two central banks.

Unfortunately, the BOJ doesn’t have a lot of tricks left to stimulate the economy or jawbone the yen. In fact, with domestic demand mostly making up for the decrease in export demand, the central bank doesn’t have much incentive to go all Hulk Smash on the markets anyway.

Traders speculate that, while the BOJ won’t make policy changes this week, it’s likely that members will adjust their forward guidance to reflect ultra-easy policies for longer than they initially indicated.

Oh, and don’t forget that the BOJ is also releasing its revised quarterly estimates for the prices and the economy. Look out for downward revisions as well as the key economic factors that BOJ members are concerned about!

Consumer-related reports

This week we’ll see a bunch of reports to either confirm or weaken expectations that improved domestic demand is making up for weaker export activity in Japan.

The annualized retail sales earlier today showed a 0.5% increase in June, which was better than the 0.2% uptick that many had expected.

June’s unemployment rate (Jul 30, 12:30 am GMT) is next, followed by the consumer confidence report (Jul 31, 6:00 am GMT) for the month of July.

These reports don’t usually move yen crosses for long, but they can fuel or cause retracements for the yen’s intraweek trends if they show enough diversion from analysts’ expectations.

Don’t even think of missing them!

Missed last week’s price action? Read JPY’s price recap for July 22 – 26!