When is the BoJ and how could it affect USD/JPY?
BoJ overview:
While the Bank of Japan isn't expected to change its monetary policy, markets are on standby for potential volatility, all the same, considering a shift in the greenback, yields and the outcome of the FOMC yesterday. However, it is expected to be a non-event. The bank normally releases its statement in the early afternoon.
While this is stacking up to be a non-event, with the bank likely to hold their short-term rate at -0.1% and to continue targeting the 10-year JGB's yield at around 0%, any positive mention around the economy improving could be a potential for an offer in USD/JPY, especially with the uncertainties surrounding the US political environment.
The BoJ's ultimate objective while expanding the monetary base, is to take the year-on-year rate of increases in CPI beyond the price stability target of 2%. The status quo has been helping the Japanese economy to grow, something that Kuroda might mention again, (despite estimates the most recent GDP updates that were coming in lower than expected).
As usual, we will get the announcement when the BoJ is ready to deliver them, but be alert from around 0230GMT. Governor Kuroda's will hold a presser has been scheduled for 0630GMT.
How could the BoJ affect USD/JPY?
The market will be looking out to hear that the BOJ isn't going to risk the Japanese recovery by tightening its policy too soon. Kuroda will need to communicate clearly in his press conference about the bank's policy approach. As mentioned, the yen could get a boost on a positive spin to the meeting's outcome on the Japanese economy, capping the USD/JPY's advance on the 111 handle with eyes back to 110.80 support guarding 110.20/30/50 (fibo area). A break higher above 111.20/30 opens 111.50/70 recent highs.
Key notes:
"All 43 economists surveyed by Bloomberg forecast believe the BOJ will keep monetary policy unchanged at its two-day policy meeting" - BBG Survey: BOJ seen keeping policy steady on Friday
USDJPY: The downside will find bids at 110.50
"The BOJ is also expected to reaffirming easing will remain in place, despite the Central Bank has been slowing the pace of monthly buying." - USD/JPY analysis: yen weakens ahead of BOJ
About the BoJ interest rate decision:
The BoJ Interest Rate Decision is announced by the Bank of Japan. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the JPY. Likewise, if the BoJ has a dovish view on the Japanese economy and keeps the ongoing interest rate, or cuts the interest rate it is negative, or bearish.