USDJPY under Pressure Ahead of BoJ Meeting
The Japanese yen steadies on speculation of further tweak to the BoJ’s yield curve control. It is expected that the central bank will maintain its ultra-loose money policy. As the US rate gap continues to widen, the yen is likely to remain depressed. Although inflation has reached its goal, the BoJ still considers that its imported component because of a weaker Japanese yen is volatile. A policy U-turn would only be justified if domestic demand or wages were to significantly improve. The bank could instead raise the yield ceiling for its 10-year bonds, which would boost the currency on the short term. 152.00 is an important resistance level and 147.00 a first support.
GBPUSD falls after BoE may pause once again
The pound is expected to weaken as the Bank of England may take another pause due to soft British economic data. The slowing pace of the labour market is causing traders to lower their expectations for interest rates. Markets expect the BoE will keep its benchmark rate at 5.25 percent at the next meeting. The markets may not be willing to price in rate reductions too soon, however, as headline inflation is still over three times the target. The currency’s upside risk would be another rate rise at…