USD/JPY – Japanese yen jumpy as BoJ announces freeze on rates

USD/JPY is showing some movement on Thursday, continuing the trend seen on Wednesday. Currently, the pair is trading at 111.88, down 0.28% on the day. On the release front, the Bank of Japan maintained interest rate levels. Later in the day, Japan releases Tokyo Core CPI and retail sales. In the U.S., durable goods orders is expected to rebound with a gain of 0.7%, after a sharp drop of 1.6% in the previous release. Core durable goods is projected to gain 0.2%. As well, unemployment claims is forecast to rise to 199 thousand. On Friday, the U.S. releases the initial reading for first-quarter GDP, with an estimate of 2.2%. We’ll also get a look at UoM consumer sentiment, which is expected to drop to 97.1 points.

As expected, the Bank of Japan made no changes to monetary policy, maintaining short and long-term interest rates at extremely low levels. However, the markets reacted after the bank announced that rates would be frozen until  the spring of 2020 at the earliest. Despite years of ultra-low rates, inflation remains stubbornly low, as the BoJ target of 2.0% remains elusive. There is a growing perception that policymakers have run out of ideas and tools for creating stimulus. The economic shock of the global trade war has hampered the Japanese economy, which is heavily dependent on trade with the U.S. and China. There have been reports of significant progress in trade talks between the U.S. and Chinese officials, but until a deal is signed, Japan’s economy will likely continue to flounder, making the yen less desirable to investors.

It’s a two-speed world out there

USD/JPY near 4-month high with BOJ on hold

Wednesday (April 24)

• 23:27 BoJ Outlook Report
• 23:27 BoJ Monetary Policy Statement
• 23:27 BoJ Policy Rate. Estimate -0.10%

Thursday (April 25)

• 2:32 BoJ Press Conference
• 8:30 US Core Durable Goods Orders. Estimate 0.2%
• 8:30 US Durable Goods Orders. Estimate 0.7%
• 8:30 US Unemployment Claims. Estimate 199K
• 19:30 Japanese Tokyo Core CPI. Estimate 1.1%
• 19:50 Japanese Retail Sales. Estimate 0.8%

Friday (April 26)

• 8:30 US Advance GDP. Estimate 2.2%
• 8:30 US Advance GDP Price Index. Estimate 1.3%
• 10:00 US UoM Consumer Sentiment. Estimate 97.1
• 10:00 US UoM Inflation Expectations
• US Treasury Currency Report

*All release times are DST

*Key events are in bold

USD/JPY for Thursday, April 25, 2019

USD/JPY April 25 at 6:30 DST

Open: 111.20 High: 112.24 Low: 111.74 Close: 111.88

USD/JPY Technical

USD/JPY posted slight losses in the Asian session and this trend continues in European trade

• 110.90 is providing support
• 112.16 was tested earlier in resistance. It is a weak line
• Current range: 110.90 to 112.16

Further levels in both directions:

• Below: 110.90, 110.28, 109.37 and 108.11
• Above: 112.16, 112.93 and 113.70

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