BOJ Monetary Policy Meeting review and what it means for AUD/JPY

In a continuation of yesterday’s quiet trading conditions in Asia, a muted session overnight with risky assets moving higher on low volumes ahead of a busy second half of the week including earnings reports from major US tech stocks, Google, Apple, and Facebook and central bank meetings.

FOREX 8

Not surprisingly given surging commodity prices and subdued volatility the best-performing currency on the night was the AUD, while the defensive JPY was the worst performer. Bringing into focus the AUD/JPY cross rate post this afternoon's Bank of Japan’s Monetary Policy Meeting (MPM).

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To recap the key outcomes of today’s Bank of Japan (BOJ) meeting, the BOJ maintained the status quo across its monetary policy settings including:

  • Yield curve control (YCC) that allows the 10yr JGB yield to rotate 25bp either size of zero.
  • Its asset purchase programs across JGB’s, ETF’s, J-REIT’s.
  • As well as its forward guidance.

The Bank of Japan also released its quarterly Outlook Report that included marginal upgrades to its FY 2021 and FY 2022 growth forecasts as the drag created by a resurgent virus is offset by stronger than anticipated foreign demand.

As leaked in news reports earlier this week, the BOJ doesn’t expect to see inflation reach its 2% target until after the end of Governor Kuroda’s second term in April 2023 and lowered its FY2021 core CPI forecasts to 0.1% from 0.5% previously.

After an impulsive rally from the November 2020, 73.13 low to the mid-March 85.45 high, AUD/JPY has spent the past six weeks consolidating gains within a contracting triangle, viewed as a continuation pattern. Leaning against this technical structure, traders may consider buying AUD/JPY on a dip back towards triangle support 83.20/00, aware that a break and daily close much below 83.00 would invalidate the bullish setup.

Or alternatively and better yet, buy AUD/JPY on a break and add on a daily close above the twin resistance coming from the downtrend line at 84.50 and last week’s 84.71 high, looking for a rally towards 87.00.

BOJ Monetary Policy Meeting review and what it means for AUDJPY

Source Tradingview. The figures stated areas of the 27th of April 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation


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