© Dukascopy Bank SA
The US Dollar strengthened versus the Japanese Yen at the beginning of the week. However, in the middle of the week, the situation has changed. The Bank of Japan decided to keep interest rates and QQE settings unchanged in line with expectations, but economists still see room for further easing in coming months amid sluggish global growth and anemic inflation. BoJ's Governor Haruhiko Kuroda and his colleagues continue to gauge the economic effect of their unpopular negative-rate policy ahead of an election next month. While the central bank maintained its upbeat view of the world's third biggest economy, it revised downwards its outlook for consumer inflation to say prices were likely to decline slightly year-on-year or hover around flat for the time being. The USD/JPY fall to 104 late Friday from 106 on Monday, ending the week with a 1.5% lost.
This week, in contrast, the pair is seen to appreciate as it depicted on the chart, with a number of bulls significantly outweighing bears. USD/JPY is forecasted to reach the 105.3 level by Friday, June 24. One of Community members, who expected the pair to appreciate in the coming days, was Jignesh, who said "The biggest take-away from the BOJ meeting in the prior week was that their hands were tied in implementing further easing measures on the fear their efforts would be wiped out in the event a UK exit from the EU materializes. With expectations that we will see a non-event on June 23rd, the USD/JPY stands to gain, both from the perspective of increased risk appetite as well as speculation of the BOJ easing, possibly even ahead of their July meeting."
The key economic events to watch this week include Janet Yellen press conference on Wednesday as well as Brexit referendum.
© Dukascopy Bank SA