JPY Weekly Forecast – No Changes Expected From the BOJ

A lack of market-moving catalysts confined the yen in tight ranges last week. Will the BOJ’s event inspire one-directional trades?

Check out the potential catalysts that might affect the safe-haven’s prices this week:

BOJ’s statement (Dec 18, Asian session)

A month and a half ago the Bank of Japan (BOJ) made no changes to its interest rates, long-term bond yield targets, and its lending programs
The central bank also downgraded its growth and inflation estimates though it shared an upbeat outlook
JPY still strengthened at the time as markets were more worried about lockdowns in Europe and the U.S. elections
Analysts don’t see policy changes from the BOJ this week

Tankan’s quarterly manufacturing index (Dec 13, 11:50 pm GMT) to improve from -27 to -17 in Q4
Tankan’s non-manufacturing index seen at -7 (from -12)
Final industrial production (Dec 14, 4:30 am GMT) to be revised from -9.0% to -3.2% in October
Trade surplus (Dec 11, 11:50 pm GMT) to clock in at 510B JPY (vs. 873B JPY in November with exports outpacing imports
Markit’s manufacturing index (Dec 16, 12:30 am GMT) to return to expansion (50.0) from 49.0 reading in December
National core CPI (Dec 17, 11:30 pm GMT) to print at -0.8% after 0.7% decline in October

Broad market themes like vaccine updates, Brexit negotiations, lockdowns in the European region, and stimulus deals will continue to influence the yen’s intraweek trends
The Fed’s statement will affect USD/JPY’s prices and maybe take the other yen crosses along for the ride

Stochastic considers the yen “oversold” against the comdolls and the European currencies
USD/JPY is mostly in neutral territory on the daily time frame
JPY is approaching overbought status against GBP