The Jackson Hole meeting will be held from 27 to 29 August, and USD/JPY is expected to trade mainly around levels testing the upper-¥158s. The meeting’s discussions and the Bank of Japan’s intervention status will be the key factors for future price movements.
USD/JPY is expected to be driven next week primarily by the Jackson Hole meeting. US monetary policy and policy expectations in the US and Japan are expected to be discussed, with attention likely to focus on the Federal Reserve’s forward guidance and the Bank of Japan’s rate-hike decision. In particular, remarks by Fed Chair Warsh and BOJ Governor Ueda (植田) are expected to attract market attention as they may provide indications of the probability of a rate hike before year-end and the direction of policy.
The second point is market pricing and intervention trends. Pricing for a September rate hike has declined because employment and inflation data have weakened since July, although the possibility of a rate hike before year-end is still considered firmly in place. The status and potential scale of BOJ intervention are being watched by the market as risk factors that could influence USD/JPY’s direction.
The third theme is the technical levels. The area around the 200-day moving average on the daily chart is seen as a potential support level, and USD/JPY is expected by some to move mainly within a range from ¥158 to the mid-¥159s. On the upside, the baseline around ¥159.50 is expected to act as resistance, while a break above it could make the area around ¥160.50 the next target.
The fourth event scheduled for next week includes US economic indicators, price indicators for central Tokyo, and remarks related to the Jackson Hole meeting. Data and comments from officials released between 25 and 29 August could particularly increase short-term volatility in USD/JPY.
To summarize as the fifth point, the factors in play are a combination of the meeting and intervention, and USD/JPY is expected to remain within a range while potentially swinging in either direction depending on the news. The market is at a stage of assessing the direction of monetary policy in the US and Japan.