Trading volatility: USD/JPY on BoJ rates
An event which may cause some volatility for traders is the Bank of Japan (BoJ) rate decision first thing on Tuesday along with the latest set of quarterly economic forecasts.
The Bank of Japan
Next week, the Bank of Japan will announce its decision on interest rates, and this could cause some ups and downs in the trading market. The person in charge of the Bank, Kazuo Ueda, might give us some clues or advice on what they are thinking, which is good because it shows they are being open and honest. The most recent data tells us that inflation, which is the general increase in prices, has slowed down a bit. In December, prices went up by 2.6%, compared to 2.8% in November. This might mean that the Bank has more freedom to reduce monetary stimulus, which is when they help the economy by putting more money into it. However, it doesn't necessarily mean that policymakers will start being strict.
USD/JPY
Now, when it comes to the USD and the JPY, the USD has been getting stronger compared to the Japanese yen, which has been getting weaker. If the Bank of Japan doesn't say that they will raise interest rates in April, which is the next chance they have to do it, then it's likely that the dollar will keep getting stronger. On Monday, the Bank will give us a lot of information about the economy, so we'll be able to understand it more completely. The idea that experts are recommending is to bet on the dollar getting stronger compared to the yen, with the goal of reaching a price of 150.
EUR/JPY
In a similar way, there could be a good opportunity to make money with the EUR and the JPY If the Japanese yen keeps getting weaker compared to both the euro and the U.S. dollar, then the price of one euro compared to the yen could reach 164.30, which is the highest it has been since November of last year. Traders should be prepared for some ups and downs when it comes to the Bank of Japan's decision about interest rates on Tuesday morning.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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