USD/JPY Fundamental Daily Forecast – BOJ Summary Showed Policymakers Debated Need for Extra Stimulus

We could see an exaggerated move to the downside on Monday due to the absence of the major U.S. players. The daily chart indicates there is room to the downside with 108.690 a potential downside target.
James Hyerczyk

The Dollar/Yen is trading lower on Monday, driven by profit-taking following last week’s surge to its highest level since May 31. Higher Treasury futures (lower interest rates) and a drop in demand for risky assets are the catalysts behind the move in the Forex pair.

Contributing to the weakness is the light volume in the Forex market due to the bank holiday in the United States. Today is Veterans Day in the U.S. The major exchanges are open but the Treasury market is closed. Additionally, violence in Hong Kong led to risk aversion in Asia, sending investors into the safety of the Japanese Yen

At 10:19 GMT, the USD/JPY is trading 108.963, down 0.280 or -0.26%.

Last week, optimism over a U.S.-China trade deal drove investors out of their hedge positions in U.S. Government debt markets. This sent U.S. Treasury yields sharply higher, making the U.S. Dollar a more attractive asset.

Japanese Economic News

Earlier today, the Bank of Japan released its Summary of Opinions from its last policy meeting on October 31.

The summary showed that Bank of Japan policymakers debated whether extra easing measures were needed to hit the central bank’s inflation target at its last policy meeting as heightened risks threatened a fragile economic recovery.

Some of the BOJ’s nine-member board insisted on the need to communicate to markets the central bank would maintain loose monetary policy given the time need to accelerate inflation to its 2% price goal, the summary of the October 30-31 meeting showed.

One of the members said additional easing measures would be needed “without hesitation” if momentum toward achieving the inflation target falters.

“In the current situation where risks are skewed to the downside, the Bank should continue to examine whether additional monetary easing will be necessary,” another board member was quoted as saying in the summary.

Another board member said the BOJ needed to signal that its policy stance was now further tilted toward monetary accommodation and a “downward bias in the policy rates.”

However, another board member said there had been no increases in risks that the inflation target would not be met.

Daily Forecast

We could see an exaggerated move to the downside on Monday due to the absence of the major U.S. players. The daily chart indicates there is room to the downside with 108.690 a potential downside target.

In other news, Japanese Core Machinery Orders fell 2.9%, completely missing the forecast for a 0.9% increase. The Current Account also came in lower at 1.49 Trillion versus a 1.66 Trillion forecast. The Economy Watchers Sentiment came in at 36.7, lower than the 40.7 estimate.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.