The focus next week will be the US midterm elections, with USD/JPY expected to remain in the 156–159 range. The BOJ's policy decision is also a market factor, and attention is turning to future market movements.
USD/JPY in the Tokyo market strengthened to around 157.90 early in the session before falling temporarily to 157.12 following the BOJ's policy decision. Yen buying then eased against a backdrop of heightened inflation concerns, and the pair recovered to the upper 157 range.
As expected by the market, the BOJ kept its policy rate unchanged at approximately 1.25%. Board member Takata voted against raising the rate to 1.50% and said the economy was entering a phase in which the pace of movement toward the neutral rate should accelerate, with underlying inflation having reached the target. In its Outlook Report, the BOJ raised its price outlook for fiscal 2027 and announced that it would increase the pace of ETF sales from ¥330 billion to ¥860 billion annually.
The US midterm elections will be the main focus for USD/JPY next week. Prediction markets put the probability of the Democratic Party winning a majority at approximately 90% in the House and approximately 60% in the Senate. If the Democrats control both chambers, disputes over budget bills and the debt ceiling could intensify. If long-term US interest rates fall, this could generate pressure to sell dollars and buy yen.
The US October employment report is due over the weekend, while expectations for a rate hike after the FOMC remain unsettled. Market attention is focused on the inflation outlook, and the market is expected to remain in a wait-and-see phase ahead of the CPI release.