Technical Bias: Bullish
- USDJPY trading at weekly highs ahead of Japan CPI.
- Tokyo core CPI forecast to fall to 0.5% YoY in April from 2.2%.
- BOJ keeps monetary policy unchanged, downgrades GDP and inflation forecast.
The USDJPY extended its gains on Thursday, edging closer to the psychological 1.2000 barrier ahead of Japan CPI data.
The USDJPY climbed to its highest level of the week, reaching a daily high of 119.89. It would subsequently consolidate at 119.62, advancing 0.4 percent. The USDJPY is testing the New York daily high of 119.60. A break above that level would lead to a test of the 50-day SMA (119.83). On the downside, the pair faces initial support at 118.50, the daily low.
Bank of Japan
The Bank of Japan kept policy unchanged in an 8-1 vote on Thursday and lowered its forecasts for economic growth and inflation, raising speculation that future monetary easing may be on the table.
The BOJ lowered its GDP forecast for the fiscal year to 2 percent from the 2.1 percent it had projected in January. For fiscal year 2016 the central bank expects GDP to advance 1.5 percent, compared to 1.6 percent in its previous forecast.
The core consumer price index (CPI) is forecast to rise 0.8 percent in fiscal year 2015, down from the previous forecast of 1 percent. Core CPI was downgraded to 2 percent from 2.2 percent for fiscal year 2016.
Japan will release official inflation data in Friday’s Tokyo session, including national CPI, national core CPI and Tokyo core CPI.
National core CPI is forecast to rise 2 percent annually in April, unchanged from the previous month. The Tokyo core CPI rate is forecast to slow to 0.5 percent annually from 2.2 percent.