- USD/JPY remains on the back foot even if BOJ announces no monetary policy change.
- US Fed failed to avoid bears, risk-tone stays under pressure.
- Kuroda’s speech, Friday’s US NFP, and trade/Brexit headlines in the spotlight for now.
Even with the BOJ refraining from any policy change, USD/JPY seesaws near multi-day low, around 108.65, during early Thursday.
The BOJ met wide market expectations while holding short-term interest rate target at -0.10% with a 10-year Japanese Government Bond (JGB) yield target around zero. However, the Japanese central bank offered more clarity on its forward guidance via the third quarter (Q3) Outlook Report even if it said that the economy likely to grow below potential temporarily and short/long term rates to stay at current/lower levels.
Read more: BOJ: Japan economy likely to grow below its potential temporarily
In spite of the US Federal Reserve (Fed) Chairman’s broadly upbeat claims, traders concentrated more on the United States’ (US) central bank’s third consecutive rate cut and downbeat expectations for inflation. The same triggered broad US Dollar (USD) weakness on late-Wednesday while carrying the same off-late.
Market’s risk sentiment has been sluggish off-late as uncertainty surrounding the US-China trade deal, mainly due to no fixed venue, joins the US Secretary of State Mike Pompeo's comments stating that China’s ruling Communist Party (CCP) took advantage of the US goodwill. Traders seem to ignore the recent favors from the US-side to China, permission to renew Iran sanction waivers being the latest, as well as receding Brexit uncertainty.
Given the already released Bank of Japan (BOJ) monetary policy decision and a quarterly Outlook Report, investors will now gear up for what the Governor Haruhiko Kuroda wants to say about the central bank’s forecasts.
Following that, markets will prepare for Friday’s headline employment data from the US, with a focus on the Nonfarm Payrolls (NFP), while trade/Brexit headlines and second-tier statistics on the economic calendar will keep entertaining momentum traders.
Technical Analysis
Unless providing a daily closing beyond 200-day Simple Moving Average (SMA), at 109.05 now, and a three-month-old rising trend-line, at near 109.35, prices are less likely to aim for 110.00. As a result, sellers remain hopeful for September month high close to 108.50 and 21-day SMA level near 108.25.
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