The Japanese yen continues to post gains. In Thursday’s North American session, USD/JPY is trading at 106.10, up 0.10% on the day. On the release front, the BoJ released its summary of opinions, and Japan surprised with a trade deficit, the first since October 2015. The deficit came in at JPY -0.20 trillion, higher than the forecast of -010 trillion. There are no indicators in the US on the schedule.
The message was “business as usual” from the Bank of Japan, which released its summary of opinions from the March meeting. Members voted 8-1 to maintain its ultra-accommodative easing program. Given that inflation is around 1%, well of the target of just below 2%, there are no plans for normalization. In the summary, members went as far as stating that if there was an increased risk of a delay in reaching the inflation target, additional easing would be needed. The cautious message from the bank did not surprise the markets, as the yen has started the week quietly.
It’s all but a given that the Federal Reserve will raise interest rates on Wednesday, which would mark the first hike of 2018. According to the CME Group, the odds of a quarter-point raise stand at an impressive 91 percent. What can we expect from the Fed during the year? The pressing question is how many rate hikes will we see in 2018. The current Fed projection remains at three hikes, but a robust US economy has raised speculation that the Fed could accelerate the pace to four hikes, which would be good news for the US dollar. Investors will be keeping a close eye on key US data, especially upcoming inflation indicators. If these numbers improve, we’re likely to see four rate hikes in 2018.
