Currency to watch this week: Japanese Yen

21 янв.

The three big events of this week will likely be the BoJ, BoC, and ECB interest rate decisions.

Even though we aren't expecting to see any rate cuts or rate rises from any bank, we are looking forward to the guidance that each will present alongside their respective decisions. The guidance might be enough to move the yen, Canadian dollar, or euro.

The USD/JPY might be the one to watch the closest this week though. In particular, we like watching the tussle in the pair as it approaches 150.000 with bulls having to become a little sheepish as they anticipate BoJ intervention around this level. Is the threat of intervention sometimes more than enough to convince bulls not to take on any more long positions?

Coincidently, Japan’s finance minister Shun'ichi Suzuki gave a verbal warning last Friday saying that the government was watching currency moves carefully.

Working against the yen is that BoJ guidance at the time of its interest rate decision will likely be as dovish as always, considering last week's domestic inflation data (falling to 2.6% in December 2023 from 2.8% in the prior month). Which is why you might anticipate more upside in the USDJPY. Although anything is possible. The Bank of Japan has shocked markets before.