Japanese Yen Insights: Understanding BoJ Inflation and IMF Growth Forecasts
Understanding BoJ Measures of Underlying Inflation
The Bank of Japan’s underlying inflation measures, reported on Tuesday, October 22, will shape buyer demand for the Yen and the USD/JPY pair. With the Bank of Japan's underlying inflation at 1.8% in August, still below the targeted 2%, lower inflation could diminish the expectations of a rate hike in Q4 2024. This measure excludes temporary factors affecting prices, highlighting the significance of upcoming national inflation figures from October 18.
Anticipating Monetary Policy Shifts
If inflation remains below expectations, the USD/JPY could drop below 149.5, while exceeding targets might push it toward 151. Additionally, BoJ policymakers echo caution, as the new Prime Minister cautioned against aggressive rate hikes. The discussions around wage negotiations might further impact consumer spending and inflation dynamics.
USD/JPY Market Movements
- USD/JPY regains the important 150 handle.
- Richmond Fed’s PMIs can shift sentiment for cash rate adjustments.
- Expectations for service revenue indices may challenge USD/JPY stability.
IMF Growth Projections and AUD/USD Dynamics
Shifting focus to the AUD/USD pair, the IMF's World Economic Growth Projections will be pivotal. China's efforts to stabilize its economy could bolster demand for the Australian Dollar, as the nation has a high export dependency. The anticipated 5% growth forecast from the IMF could lead the AUD/USD pair towards $0.67. On the contrary, a lower forecast could drag it down to $0.66.
Key Considerations
- Monitor private sector PMI data for fluctuations in the AUD/USD pair.
- Understand the ramifications of Chinese economic policies on Australian exports.
- Stay informed on Fed predictions to adjust market strategies.
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This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.