The EUR/JPY is trading in a back-and-forth pattern around the 143.00 level in the Asian session. Investors are keeping a close eye on the Bank of Japan (BoJ) Governor nominee Kazuo Ueda’s speech, scheduled for Friday. It is expected that Ueda will discuss the transition from the decade-long ultra-loose monetary policy managed by the BoJ. This could lead to a downside move in the EUR/JPY below the 143.00 level.
Japan’s National Consumer Price Index (CPI) (Jan) data will also be closely watched. The headline CPI is expected to be higher at 4.5%, compared to the prior release of 4.0%. The core CPI, which strips off oil and food prices, is seen at 3.2%, higher than 3.2% in the prior release. The Japanese economy is gradually achieving a higher inflation rate due to the improvement in wages and consumer spending.
Meanwhile, the Euro is struggling to gain strength despite hawkish comments from European Central Bank (ECB) President Christine Lagarde. She has reiterated that the ECB intends to raise the key rates by 50 basis points (bps) at the upcoming policy meeting. Lagarde also mentioned that the central bank is not seeing any wage-price spiral in the Eurozone. If the ECB decides to go ahead with the rate hike, it will push rates to 3.5%.
Economists at Commerzbank have stated that the BoJ decision in early March, still under Kuroda, might provide a first indication as to how monetary policy will develop. Ueda will be running his first meeting in late April and it is unlikely that he would immediately turn everything in monetary policy inside out.
Overall, EUR/JPY is expected to deliver a downside move below 143.00 ahead of BoJ Ueda’s speech. Some further yield-widening discussions are expected from BoJ Ueda’s speech. On the other hand, ECB Lagarde’s announcement of one more 50 bps rate hike will push rates to 3.5%. Investors will be closely watching the Japan’s National Consumer Price Index (CPI) (Jan) data and BoJ Governor nominee Kazuo Ueda’s speech for further direction in the EUR/JPY.
The Bank of Japan has been managing an ultra-loose monetary policy for the past decade and Japan’s government has been reiterating that the administration will look for a transitioning process in the monetary policy with novel BoJ leadership to make the Japanese Yen more competitive against other FX currencies. This could lead to a downside move in the EUR/JPY below the 143.00 level.
The Japanese economy is gradually achieving a higher inflation rate due to the improvement in wages and consumer spending. This could lead to an increase in the headline CPI to 4.5% from the former release of 4.0%. The core CPI, which strips off oil and food prices, is seen at 3.2%, higher than 3.0%, in the prior release.
European Central Bank (ECB) President Christine Lagarde has reiterated that the ECB intends to raise the key rates by 50 basis points (bps) at the upcoming policy meeting. If the ECB decides to go ahead with the rate hike, it will push rates to 3.5%. Lagarde also mentioned that the central bank is not seeing any wage-price spiral in the Eurozone.
Economists at Commerzbank have stated that the BoJ decision in early March, still under Kuroda, might provide a first indication as to how monetary policy will develop. Ueda will be running his first meeting in late April and it is unlikely that he would immediately turn everything in monetary policy inside out. Therefore, investors will be closely watching the Japan’s National Consumer Price Index (CPI) (Jan) data and BoJ Governor nominee Kazuo Ueda’s speech for further direction in the EUR/JPY.
Overall, the EUR/JPY is expected to deliver a downside move below 143.00 ahead of BoJ Ueda’s speech. Some further yield-widening discussions are expected from BoJ Ueda’s speech and ECB Lagarde’s announcement of one more 50 bps rate hike will push rates to 3.5%. Japan’s government is looking for a transitioning process in the monetary policy to make the Japanese Yen more competitive against other FX currencies and the Japanese economy is gradually achieving a higher inflation rate. All these events will have an impact on the EUR/JPY and investors will be closely watching the Japan’s National Consumer Price Index (CPI) (Jan) data and BoJ Governor nominee Kazuo Ueda’s speech for further direction in the EUR/JPY.
