The BoJ delivered a minimal tweak to policy this week with markets still betting on rate hikes in April 2024. USDJPY benefitted from a weaker US Dollar which should it continue could negate the need for full blown BoJ FX intervention.
It’s been an intriguing week for the Japanese Yen but one which has done little to provide clarity on the path forward. The Bank of Japan meeting this week saw the Central Bank tweak its Yield Curve Control policy in what is another small step to policy normalization. The BoJ maintained its target for the JGB 10Y yield at around 0% but redefined 1% as the upper band rather than a hard cap as had previously been the case.
The US will also see a slowdown in data releases with speeches from Fed Chair Powell on both the 8th and 9th of November before the Michigan Consumer Sentiment data comes into focus. It will be interesting to hear the comments of Fed Chair Powell and whether he will push back on the dovish narrative which seems to be building around future rate hikes. After Friday's jobs data however, the Fed Chair may even unintentionally add further fuel to the current dovish narrative.
Looking at the technical perspective and the weekly chart looks on course for a shooting star candle close which could finally be a sign of further downside. Jut observing the Candles on a weekly timeframe and the large wicks resemble the candles which preceded the FX intervention by the BoJ in 2022. Is this to be seen as a sign or just a return of some volatility in USDJPY?Looking at the daily chart below and as you can see USDJPY failed to break the 2022 high falling short by about 20-pips.
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