When are the BoJ Summary of Opinions and how could they affect USD/JPY?
The BoJ Summary of Opinions Preview
The Bank of Japan (BOJ) will publish its report on Sunday at 23:50 GMT. This report includes the BOJ's projection for inflation and economic growth. It is scheduled 8 times per year, about 10 days after the Monetary Policy Statement is released.
How could the BoJ Summary of Opinions affect USD/JPY?
USD/JPY trades on a positive note on the day in the lead up to the BoJ Summary of Opinions. The pair edges higher as the US Dollar (USD) strengthens after former Federal Reserve (Fed) Governor Kevin Warsh was selected to be the next Fed chair.
The first upside barrier for the USD/JPY pair is seen at the January 23 high of 159.81. The next resistance level emerges at the 160.00 psychological level, en route to the January 14 high of 161.00.
To the downside, the 100-day Exponential Moving Average (EMA) of 154.50 will offer some comfort to buyers. Extended losses could see a drop to the January 30 low of 152.50. The next contention level is located at the January 29 low of 151.95.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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