It looks like it will be another busy week for traders this week, with plenty of economic releases and central bank announcements. Traders will be watching the Bank of Japan this week as well as inflation data out of the UK and central bank minutes from the BOE, RBA and Fed. Traders will also be alert to UK GDP and manufacturing data out of China.
On Tuesday night/ Wednesday morning, the Bank of Japan meet to discuss interest rates. The announcement and accompanying statement from BOJ Governor Kuroda could be a key event of the week with USD/JPY hovering around 101.5.
Thinking back to last month’s meeting, most traders were pricing in another round of monetary easing from the bank and were left disappointed by a lack of action and guidance.
This time around and some traders are still calling for action but if anything, the chances have gone even lower, particularly after the impressive economic data that is beginning to flow out of Japan. First quarter GDP came in last week at 5.9%, sharply higher than the 4% expected by economists.
The better than expected growth numbers will surely slow the pace of action at the BOJ and for that reason USD/JPY should remain under pressure as we progress through the week. Momentum in USD/JPY has already been slowing in recent weeks with the currency failing to make much progress past 102/103 on numerous occasions. With technical indicators also turning down, the upcoming BOJ meeting could be the catalyst to send USD/JPY back below the 100 handle.