Will the unwillingness of the BoJ to hike rates lift USDJPY?
The USD/JPY pair is currently at significant support levels, mainly due to intervention by the Japanese Central Bank. The critical support level to watch is 154.47, the low from June 4th. If the price remains above this level, it could push towards 158.81 and 160.30.
On July 31st, the Bank of Japan will host another rate meeting. They are expected to introduce quantitative tightening to reduce their holdings, which are likely structured to have minimal market impact.
Moreover, despite annual inflation being at 2.8% and a jobless rate of 2.6%, the Bank of Japan will likely avoid raising interest rates due to the weak economic outlook; Japanese GDP is currently at a negative 0.5%. However, if they would introduce a rate hike, then that is likely to strengthen JPY, as the market does not price in it.
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On July 31st, the Bank of Japan will host another rate meeting. They are expected to introduce quantitative tightening to reduce their holdings, which are likely structured to have minimal market impact.
Moreover, despite annual inflation being at 2.8% and a jobless rate of 2.6%, the Bank of Japan will likely avoid raising interest rates due to the weak economic outlook; Japanese GDP is currently at a negative 0.5%. However, if they would introduce a rate hike, then that is likely to strengthen JPY, as the market does not price in it.
This content is not directed to residents of the EU or UK. Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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