Japanese Yen Forecast: BoJ Summary of Opinions Sends USD/JPY Higher

The Bank of Japan’s Summary of Opinions took center stage on Monday, November 10, spotlighting USD/JPY amid ongoing speculation about a near-term rate hike.

Recent wage growth figures had tempered bets on a December BoJ rate hike, sending USD/JPY higher. However, Japanese government threats of a yen intervention have capped any USD/JPY upside. Lawmakers and the BoJ have raised concerns over the weaker yen pushing import prices higher, affecting Japanese households’ purchasing power. Household spending remains a focal point for the BoJ, given that private consumption accounts for around 55% of GDP.

The highly anticipated Summary of Opinions provided insights into policymakers’ views on the Japanese economy, inflation, and conditions needed to hike interest rates.

Notably, some policymakers were less concerned about the effect of US tariffs on the Japanese economy. One policymaker stated:

“Even if the impact of U.S. tariff policy becomes pronounced, the expected scale of the impact has become smaller than it was before. Therefore, it is also likely that Japan’s economic growth will not be too modest. As a baseline scenario, Japan’s economy is expected to continue to grow at a pace slightly above its potential growth rate in both fiscal 2025 and 2026.“

Meanwhile, there was some uncertainty over the effect of Prime Minister Sanae Takaichi’s policies on the economy and prices.

On prices, the BoJ had mixed views. Several policymakers called for close monitoring of wages, household income, and spending trends. However, the general consensus was that inflation would pick up, with the 2026 Shunto wage increases likely to deliver price stability, crucial for a rate hike.

BoJ Opinions on Monetary Policy Remain Divided

Nevertheless, the BoJ was more divided on monetary policy, suggesting further delays to raising interest rates, weighing on the yen.

One policymaker called for the close monitoring of the effects of trade policy on the global economy, the Fed’s rate path, and prices and wages. Another called for time to assess US trade policy and the new Japanese government’s economic policies.

For context, just five of the thirteen opinions given on monetary policy had a more hawkish tone. The lack of a clear majority for rate hikes suggested that monetary policy tightening could be delayed further, weighing on the yen.

Overall, the divergence between the BoJ’s cautious stance and the Fed’s easing bias remains the key driver of near-term USD/JPY direction.

Capitol Hill in the Spotlight

While the BoJ Summary of Opinions gave insights into the conditions needed for a rate hike, developments on Capitol Hill will also influence USD/JPY trends. Reports of lawmakers nearing an agreement on a federal budget lifted demand for the US dollar.

The Kobeissi Letter commented on the US Senate impasse nearing an end, stating:

“US Congress is reportedly close to reaching a deal to reopen the government after Senate Democrats signaled they are ready to back a bipartisan proposal. At least 10 Democrats are expected to support advancing a spending and short-term funding bill.”

The Kobeissi Letter added:

“A short-term funding bill is now expected to receive enough support to reopen the US government through January 31st. The measure would provide full-year funding for SNAP and Veterans Affairs.”

USD/JPY rose 0.25% to 153.796 in early trading on Monday, November 10. A reopening would limit the shutdown’s impact on the US economy. Furthermore, a reopening could expedite the release of key inflation and labor market data ahead of the Fed’s December interest rate decision. The data would provide FOMC members with the necessary information to make an informed policy decision.

Fed Speakers to Fuel Fed Rate Cut Speculation

While market focus will be on Capitol Hill, traders should closely monitor FOMC members’ speeches. Views on inflation, the labor market, and the economic outlook will influence sentiment toward the Fed rate path.

According to the CME FedWatch Tool, the chances of a Fed rate cut in December were finely balanced, rising from 63.0% on October 31 to 66.9% on November 7. Growing support for further monetary policy easing could push USD/JPY toward 153. On the other hand, calls to delay a cut over concerns about elevated inflation may send the pair toward 155.

Despite the potential boost from a US government reopening, the near-term USD/JPY outlook remains bearish. Weakening US labor market data may put pressure on the Fed to consider further policy easing, weighing on demand for the US dollar.

USD/JPY Scenarios: Diverging Monetary Policies

• Bearish USD/JPY Scenario: Hawkish BoJ commentary, intervention warnings, and dovish Fed rhetoric could push USD/JPY toward 153.
• Bullish USD/JPY Scenario: Dovish BoJ cues and hawkish Fed comments could send USD/JPY toward 155.

Read the full USD/JPY forecast, including chart setups and trade ideas.

Key Market Drivers to Watch Today:

• Bank of Japan commentary.
• Intervention warnings.
• Developments on Capitol Hill.
• Fed speakers.

For more in-depth analysis, review today’s USD/JPY trading setups in our latest reports and consult the economic calendar.