USDJPY is threatening to break above the 148.0 psychologically-important level, amid broad-based US dollar strength.
Bloomberg’s FX model forecasts a 73% chance of USDJPY trading within the 145.18 – 150.18 range this week.
Markets are already bracing for the most volatility over a one-week period for this FX pair since July, while also becoming notably more bullish on the Yen.
Japan’s latest CPI prints are sandwiched by pivotal policy meetings by the Federal Reserve (Fed) and the Bank of Japan (BoJ) on either side of the Pacific - all set to dictate USDJPY’s immediate fate.
Events Watchlist
- Wednesday, September 20th: Federal Reserve policy decision
The Fed is widely expected to leave US interest rates unchanged at this week’s meeting. Markets will be watching for clues out of either the FOMC policy statement, and/or Fed Chair Jerome Powell’s press conference. Hints of one more Fed rate hike may send USDJPY soaring, barring any currency intervention by the BoJ.
- Friday, September 22nd: Japan August national CPI
Economists predict the headline consumer price index (CPI) will ease slightly to 3% year-on-year (y/y), while core CPI (excluding fresh food and energy prices) should match July’s 4.3% y/y figure. Higher-than-expected inflation may translate into a USDJPY slump, on bets of the BoJ ending its negative rates regime sooner rather than later.
- Friday, September 22nd: Bank of Japan policy decision
Markets predict a measly 22% chance of a BoJ rate hike this week. However, seasoned market watchers are only too aware of this central bank’s penchant for surprises! Another tweak to its yield-curve control, or even the slightest of hawkishness out of BoJ Governor Kazuo Ueda, should serve as triggers for Yen bulls to run wild.
Here’s comprehensive list of other key economic data and events due this week:
Monday, September 18
- Apple set to release iOS 17
Tuesday, September 19
- AUD: RBA meeting minutes
- EUR: Eurozone August CPI (final)
- CAD: Canada August CPI
- OECD release global economic outlook
Wednesday, September 20
- JPY: Japan August external trade
- CNH: China loan prime rates
- GBP: UK August CPI
- USD: Fed policy meeting
Thursday, September 21
- NZD: New Zealand 2Q GDP
- EUR: Eurozone September consumer confidence
- CHF: Swiss National Bank policy meeting
- GBP: Bank of England policy meeting
- USD: US weekly initial jobless claims
Friday, September 22
- NZD: New Zealand 3Q consumer confidence; August external trade
- JPY: Bank of Japan policy meeting; August national CPI; September PMIs
- AUD: Australia September PMIs
- GBP: UK August retail sales; September consumer confidence and PMIs
- EUR: Eurozone September PMIs
CAD: Canada July retail sales