The BOJ is up this week! What are traders expecting from Kuroda and his team?
Japan may be on a bank holiday today, but that won’t stop traders from preparing for this week’s potential catalysts!
BOJ’s policy decision (Sept 19, Asian session)
Just hours after the Fed’s highly awaited decision, the Bank of Japan (BOJ) will also publish its monetary policy statement.
Traders aren’t pricing in any policy changes from Kuroda and his team this week. For one thing, they will likely want to wait and see how the sales tax increase – which will take effect on October 1 – will affect the economy. A closely watched corporate sentiment survey is also due around the same time, which could help BOJ members in their next decisions.
That doesn’t mean that we won’t see volatility though! Word around is that the BOJ gang could talk details of their easing options in case they need to green light them this year. After all, they’ll need to show the markets that they could ramp up stimulus to discourage further yen strength.
Options include a deeper negative interest rate, lowering the target for the 10-year government bond yield, expanding asset purchases, and faster expansion of the monetary base.
Will BOJ members share detailed options this week? Don’t even think of missing the event if you’re planning on trading any yen pairs in the next few days!
Overall risk sentiment
In case you missed the yen’s weekly recap, you should know that positive U.S.-China trade headlines kept the safe haven under pressure for most of the week last week.
This week pay attention to how markets react to escalating conflict in the Middle East. So far, Trump is still waiting on Saudi Arabia on how to “proceed” with Iran possibly being responsible for the attacks on Saudi Arabia’s oil supply. If Trump and MBS team up to make missiles rain on Iran, then we could see oil prices jump and risk appetite plunge.
Meanwhile, FOUR major central banks are scheduled to publish decisions this week. The most exciting one will probably be the Fed, which is expected to cut its rates further.
Other data events such as Canada and U.K.’s retail sales and CPI and Australia’s jobs report could also influence overall risk sentiment, so make sure you check out your forex calendar and stay glued to the tube for updates!
Missed last week’s price action? Read JPY’s price recap for September 9 – 13!