This week, monetary policy decisions by the US and Japanese central banks will be the focus for USD/JPY. Both the FOMC and the Bank of Japan are reported to be expected to leave policy unchanged, making a narrowing of the Japan-US interest-rate differential unlikely.
Fisco, an investment information company, has provided an outlook for this week’s USD/JPY market. The FOMC is scheduled for the 27th–28th and the Bank of Japan Monetary Policy Meeting for the 29th–30th, with both expected to leave policy unchanged. As a result, the interest-rate differential between the two countries is unlikely to narrow, and the underlying trend of dollar buying and yen selling is expected to continue.
For the FOMC, unchanged policy is priced in, and the focus is expected to shift to the possibility of a rate hike in December. Dollar buying could lead the market depending on the meeting’s outcome, although some expect a cautious stance to continue.
Among US economic indicators, the September core PCE price index is scheduled to be released on the 29th, with its year-on-year increase expected to be around 3.1%. This could attract market attention as evidence of strong inflationary pressure and potentially support expectations of a December rate hike.
The preliminary US third-quarter GDP estimate on the same day is expected to show annualized quarter-on-quarter growth of around 3.0%. Some views hold that growth indicators are likely to provide the ruling party with a basis for fiscal consolidation. Market reactions could diverge depending on the direction of these indicators.