USD/JPY Fundamental Daily Forecast – Light Trade Expected as Investors Prep for Next Week’s Central Bank Activity

The Dollar/Yen is flat-lining on Friday as investors try to sort out the details of the new Brexit developments, while holding out hope the U.S. and China are moving closer to completing phase one of the partial trade agreement announced on October 11. Investors are also gearing up for next week’s U.S. Federal Reserve and Bank of Japan monetary policy meetings and interest rate decisions.

At 09:09 GMT, the USD/JPY is trading 108.591, down 0.046 or -0.04%.

Japan News

There were no major economic releases from Japan, but the country’s trade minister, Isshu Sugawara, resigned one month into the job.

According to reports, Japan’s trade minister resigned Friday a month into his job in a scandal over condolence money, expensive melons and other gifts allegedly offered to election supporters.

Prime Minister Shinzo Abe said he had accepted Isshu Sugawara’s offer to resign and replaced him with Hiroshi Kajiyama, formerly the minister in charge of local revitalization and regulatory reform.

“I bear responsibility for his appointment and I apologize to the people for causing a situation like this,” Abe told reporters.

The news had little impact on the Japanese Yen.

Additionally, investors are preparing for the Bank of Japan’s two-day meeting ending October 31. Its decision is expected to be close, though sources told Reuters the BOJ is leaning toward keeping monetary policy steady.

U.S. News

In the U.S. on Thursday, Core Durable Goods Orders came in at 0.3%, lower than the 0.2% forecast. The previous month was revised lower to 0.3%. Durable Goods Orders came in at -1.1%, worse than the -0.5% forecast.

Weekly Unemployment Claims were 212K, lower than the 216K estimate.

Flash Manufacturing PMI rose to 51.5 from 51.1, beating the 50.7 forecast. This helped ease some concerns over a contraction in the sector. Flash Services PMI was 51.0, just like traders expected.

New Home Sales came in at 701K, lower than the 710K forecast. The previous month was revised lower to 706K.

Traders expect the Fed to cut rates by a quarter point next week, but some economists say a few of the reasons the Fed gave for making the cuts may be less pressing now.

Some see the Fed pausing after next Wednesday’s cut. Goldman Sachs economists, in fact, expect the Fed to signal it will hold off after that one.

Daily Forecast

We’re not expecting much movement on Friday unless there is a surprise “risk-on” or “risk-off event.

Traders will get the opportunity to react to the Revised University of Michigan Consumer Sentiment and Inflation Expectations reports. Consumer Confidence is expected to hold steady at 96.0.

The Federal Budget Balance is expected to come in at $83.5 Billion.