The yen is making moves ahead of the BOJ policy decision and the U.S. core PCE price index release!
How will today’s headlines affect USD/JPY’s intraweek uptrend?
Before moving on, ICYMI, yesterday’s watchlist looked at NZD/USD’s channel resistance ahead of the U.S. advance GDP release. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
The initial reading of the U.S. Q1 2023 GDP came in at 1.1% q/q, well below Q4’s 2.6% growth and the expected 2.0% increase.
U.S. initial jobless claims dropped to 230K (vs. 247K expected and 246K previous) in the seven-day period ending April 22, supporting at least one more Fed rate hike
U.S. pending home sales broke a three-month rebound and expectedly dropped by 5.2% m/m in March to its lowest levels since December.
Tokyo’s CPI – considered a leading indicator for Japan’s inflation – accelerated from 3.2% to 3.5% y/y in April
Japan’s unemployment rate jumped from 2.6% to 2.8% in March (vs. 2.5% expected)
An early reading of Japan’s factory output showed an 0.8% m/m gain in March, slower than the upwardly revised 4.6% February uptick but faster than the 0.5% growth estimates
Japan’s retail sales rose by 7.2% y/y in March against the 5.8% expected and 7.3% increase in February
Australia’s producer price increases accelerated from 0.4% to 1.0% q/q in Q4. On an annualized basis, prices rose by 5.2% (vs. 5.0% expected)
Price Action News
Overlay of JPY Pairs 15-min
The Japanese yen started the Asian session trading on a chill note, maintaining its post-U.S. GDP ranges when Japan’s economic releases hit the markets.
While Tokyo’s CPI came in hotter than expected, the rest of the data releases still support an easy monetary policy from the Bank of Japan (BOJ).
Japan’s positive releases, combined with a risk-friendly environment during the Asian session, dragged JPY lower across the board ahead of BOJ’s decision.
Upcoming Potential Catalysts on the Economic Calendar:
Germany’s preliminary CPI out during the European session
France’s flash GDP at 5:30 am GMT
Switzerland’s retail sales at 6:30 am GMT
Germany’s unemployment change at 7:55 am GMT
SNB Chairman Jordan is to give a speech at 8:00 am GMT
Canada’s monthly GDP at 12:30 pm GMT
U.S. core PCE price index at 12:30 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
USD/JPY 15-min Forex Chart by TradingView
USD/JPY has been showing higher highs and higher lows since the middle of the week when global growth concerns started easing.
The pair is now trading in an observable uptrend inside an ascending channel after bouncing from today’s Standard Pivot Point near the 133.75 area.
Will USD/JPY extend its gains today?
The BOJ isn’t expected to make monetary policy changes in the next few hours, but everyone will wait to see if new BOJ head honcho Kazuo Ueda will put YCC program changes on the table.
Talks of maaaaybe allowing higher short and long-term interest rates could drag USD/JPY back to its intraday lows near 133.75.
After all, USD/JPY has already hit (and gotten rejected) 55-ish pips above its open prices. That’s already half of USD/JPY’s daily average volatility!
If BOJ’s event turns out to be a non-mover, however, then I wouldn’t mind trading with the intraweek trend and aiming for higher highs.
The R1 (134.38) inflection point near the top of the channel would be a good initial target but you can also aim for the R2 (134.75) levels if there’s enough USD-buying until the end of the week.
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