USD/JPY is showing little movement in the Tuesday session. In North American trade, the pair is trading at 112.86, up 0.05% on the day. In economic news, the BoJ released the minutes of its monetary policy meeting and Japanese SPPI improved to 1.3%, above the estimate of 1.1%. In the U.S, today’s key indicator is CB Consumer Confidence, which is expected to climb to 132.2 points. On Wednesday, the spotlight will be on the Federal Reserve, which is likely to maintain interest rates at a range between 2.00% and 2.25%.
The BoJ released the minutes of last week’s policy meeting. The BoJ is showing no signs of altering its ultra-accommodative policy. but the minutes indicated that some policymakers are concerned about the impact of the policy on the banking system. With inflation still below the Bank’s target of around 2 percent, the BoJ is unlikely to take anything more than tweak current policy. At the policy meeting, the Bank held its short-term interest rate target at -0.1 percent and a pledge to guide 10-year government bond yields around zero percent. The BoJ also maintained a pledge to keep interest rates extremely low for an extended period.
The U.S and China fired more trade salvos at each other this week, and that could spell bad news for the Japanese yen. On Monday, the U.S imposed tariffs on some $200 billion worth of Chinese goods, while China responded with tariffs of $60 billion on U.S products. There may be more headwinds ahead, as China sharply attacked the U.S, saying it had plunged “a knife to China’s neck” with the new tariffs. The Chinese have canceled trade talks with the Trump administration, and no new talks are likely to be held until the mood improves between the world’s two largest economies. Previous rounds of tariffs between the two economic giants have boosted the U.S dollar, but so far, investors have reacted calmly and have not snapped up the U.S dollar at the expense of other currencies.
