Remaining Long on USD/JPY, As BOJ Pledges to Keep Cash Flowing - Forex News by FX Leaders
BOJ is not moving rates up anytime soon

Remaining Long on USD/JPY, As BOJ Pledges to Keep Cash Flowing

Posted Monday, July 11, 2022 by
Skerdian Meta • 2 min read

Most major central banks have turned extremely hawkish and have been hiking interest rates pretty fast, apart from the Bank of Japan (BOJ), which is not thinking about this. They gave some signals that they could start turning hawkish soon, but as the global economy heads into recession and the Japanese economy shows signs of deteriorating they are changing that opinion and are deciding to keep the monetary policy very loose.

Japanese Machinery Orders Data for May

  • May Core Machinery Orders -5.6% vs -5.3% expected
  • April machinery orders were +10.8%
  • This is a volatile data set
  • It used to give indications to business CAPEX 6 to 9 months out

The Bank of Japan Governor Kuroda was speaking earlier today and he changed the stance from the previous meetings, when the BOJ commented that they would tighten the monetary policy if inflation got out of control. But CPI inflation remains way lower than in Europe and the US and they are standing put to their position, as Kuroda said earlier today.

USD/JPY H1 Chart – Buyers Are in Charge Again

Bank of Japan Governor Kuroda Speaking

  • Japan’s economy showing some signs of weakness but picking up as a trend
  • Japan’s economy is likely to recover as the impact of COVID-19, supply constraints ease
  • Japan’s core consumer inflation moving around 2%
  • Uncertainty regarding japan’s economy is very high
  • Japan’s financial system stable as a whole
  • Must be vigilant to the impact of financial, currency market moves and their impact on Japan’s economy, prices
  • BOJ will maintain ultra-loose policy to stably achieve the 2% inflation target
  • BOJ stands ready to ease policy further without hesitation as needed
  • Japan’s consumer inflation is likely to accelerate the pace of increase
  • Japan’s financial conditions are easing as a whole
  • Expects short and long term policy rate targets to remain at current or lower levels

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