Another meeting of the Bank of Japan (BoJ) and another non-moving statement with major focus on inflation even in subsequent speech of BoJ’s Governor Haruhiko Kuroda. The Japanese yen will be again just a victim of dollar’s moves, being led mostly by his US counterpart.
The central monetary authority left its stimulus program unchanged, being still focused on the inflation target, while only BoJ member Kiuchi asked for tapering to ¥45 trillion a year. Nevertheless, it points out that business mood is improving and capital expenditure rising, while economy is expected to recover generally. “Exports are picking up and capital expenditure is rising moderately as a trend as corporate revenues improve,” stated BOJ in a statement.
It also revised up its assessment on housing investment to say it “appeared to be picking up.” Last month, it said housing investment was bottoming out with some signs of a pick-up.
Subsequent Kuroda’s speech only added that expectations of higher inflation are the major background for an acceleration of prices. Nevertheless, this speech proved to be no boost for the currency pair as previous governor’s speech where he hinted that real exchange rate of yen remains very low and the Japanese currency strengthened immediately after his words.
As for the US dollar, we could see Federal Open Market Committee (FOMC) statement, economic projections and Federal Reserve’s Chief Janet Yellen’s speech. As FOMC proved to be a minor mover, economic projections brought the expected disappointment on GDP outlook and slightly higher unemployment rate expectations. Later Yellen seemed to be creating space for the monetary policy, albeit confirming that she expects the rate-hike to come this year and the pace to be gradual then. Dollar subsequently lost against the yen and was seen week even on Friday.
From the technical point of view, we keep the levels from our previous article. Yen’s next resistance level lies at ¥124.220 and further one above ¥125 handle at ¥125.650. Nevertheless, ¥123.619 seems to be a strong level for yen, surpassed only shortly during FOMC.
In case of yen’s strengthening, take profit positions may be set on ¥122.875 level or lower at ¥121.914.
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