The yen loses ahead of the Bank of Japan's decision. Change in government policy?

The last full week of trading in April is coming to an end. This does not mean, however, that the market situation is getting drowsy, because paradoxically, it is the Thursday and Friday sessions that may provide investors with the greatest increase in volatility.

In the stock market, attention turns to performance A and Microsoft, in the case of the currency market, full attention is directed to the USD/JPY pair, which tomorrow will react equally to the BoJ interest rate decision and the US PCE inflation report.

Rumors of currency intervention

At tomorrow's meeting, the BOJ is expected to keep its benchmark interest rate at 0,1%. The decision follows the BoJ's cessation of yield curve control and asset purchases, signaling a change in policy, although while maintaining a dovish outlook for future rate adjustments. Analysts remain skeptical about any significant policy changes that could strengthen the yen, suggesting the central bank is likely to maintain its dovish stance.

The second key element for the yen are rumors of currency intervention. At the moment, however, we have not had to deal with it, and the media narrative built by the Japanese establishment seems to postpone the perspective of this movement in time.

Pending macro data

It will become crucial in the West PCE report, i.e. the measure of inflation in the economy preferred by the American FED. In general terms, the market expects that the dynamics of growth in prices of goods and services will be similar to last month's readings. The main reading on a y/y basis is expected to surprise slightly higher. On the other hand, a slightly lower dynamics is to be shown by the reading for the same period, but for the base measure, i.e. not taking into account food and energy prices.

The USD/JPY pair remains near 34-year highs today, focusing investors' attention on upcoming macro reports. In the broad Forex market, this is exactly what it is Japan's currency is currently the worst performer. The US dollar is also doing slightly worse. Currently, the leading currencies of the Antipodes are the Australian and New Zealand dollars. The Polish zloty is gaining in the morning. We will pay PLN 4.0289 for a dollar, PLN 4.3207 for a euro, PLN 4.4112 for a franc, and PLN 5.0408 for a pound.

Source: Mateusz Czyżkowski, XTB