With the release of the FOMC minutes pending, the focus for USD/JPY will be whether it can break above the 200-day moving average. Reports on the BOJ's policy outlook and developments in expectations for a Fed rate hike may also affect the market.
In Tuesday's foreign exchange market, reports suggested that BOJ officials were considering whether to acknowledge that underlying inflation had reached 2%, indicating a policy of continuing rate hikes at short intervals. Meanwhile, price indicators were tracking as expected, and reports said that many market participants believed the BOJ would be cautious about raising rates at its October meeting.
BOJ Governor Ueda (植田) indicated that, while maintaining accommodative financial conditions, the Bank could raise its policy rate in response to economic and price developments. Reports also suggested that views were growing stronger that stabilising underlying inflation at around 2% was important.
The widening US trade deficit again came into focus. The August trade balance showed a deficit larger than market expectations, with increased imports cited as the reason.
The outlook for USD/JPY could fluctuate depending on the technical picture, including the 198-day moving average, and the contents of the September FOMC minutes. Whether expectations of a Fed rate hike will revive is a key focus.