Announcement of the BoJ opinion summary
The Bank of Japan (BOJ) will release its report on Sunday at 23:50 GMT. This report contains the BOJ’s projection of inflation and economic growth. It takes place 8 times a year, approximately 10 days after the publication of the Monetary Policy Communication.
How could the BoJ’s opinion summary impact the USD/JPY rate?
The quotations of the USD/JPY pair on the day before the summary of the BoJ opinion were positive. The pair is gaining in value as the US dollar (USD) strengthens following the election of former Federal Reserve (Fed) Governor Kevin Warsh as the next Fed chairman.
The first barrier to growth for the USD/JPY pair is the January 23 high of 159.81. The next resistance level appears at the psychological level of 160.00, on the way to the January 14 high of 161.00.
The downside is that the 100-day exponential moving average (EMA) of 154.50 will provide buyers with some comfort. Long-term losses could push it back to the January 30 low of 152.50. The next competitive level is at the January 29 low of 151.95.
Japanese Yen FAQs
The Japanese yen (JPY) is one of the most frequently traded currencies in the world. Its value is largely determined by, among other things, the performance of the Japanese economy, but in particular the policy of the Bank of Japan, the difference between the yields of Japanese and American bonds, and the risk sentiment of investors.
One of the tasks of the Bank of Japan is currency control, so its movements are crucial for the yen. The BOJ has at times intervened directly in currency markets, generally to depress the value of the yen, although it often refrains from doing so due to the political concerns of its major trading partners. The BOJ’s ultra-loose monetary policy in 2013–2024 resulted in the depreciation of the yen against other major currencies due to the growing policy divergence between the Bank of Japan and other major central banks. More recently, the gradual withdrawal from this ultra-loose policy has provided some support to the yen.
Over the past decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to widening policy divergences with other central banks, particularly the US Federal Reserve. This supported a widening spread between US and Japanese 10-year bonds, which supported the US dollar against the Japanese yen. The BoJ’s decision to gradually exit ultra-loose policy in 2024, combined with interest rate cuts at other major central banks, narrows the gap.
The Japanese yen is often viewed as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money into the Japanese currency due to its supposed reliability and stability. The turbulent times are likely to strengthen the value of the yen relative to other currencies considered riskier to invest in.
