Next week, monetary policy meetings in Japan, the US and Europe are scheduled, and the USD/JPY outlook is expected to be driven mainly by expectations that rates will remain unchanged. Market attention may shift to the outlook for the December meetings and developments in geopolitical risks.
The USD/JPY market is expected to remain sensitive next week as monetary policy meetings in Japan and the US take place around the same time, with markets weighing the outlook for the pace of future rate hikes and uncertainty surrounding geopolitical risks. Both the US Federal Open Market Committee (FOMC) and the Bank of Japan Monetary Policy Meeting are widely expected to leave rates unchanged, and market attention is expected to shift to the outlook for the December meetings.
The Bank of Japan is expected to maintain the current policy stance, while expectations are emerging that it will revise upward its inflation outlook for fiscal 2027. The outcome of discussions over applying the Transmission Protection Instrument will be the key inflection point, and an indication that the target has been reached could also affect the direction of monetary policy.