Forex - USD/JPY pulls back from 15-month low, sparking BoJ speculation USD/JPY snapped back from 110.67, its lowest level since October 2014, sparking speculation that the Bank of Japan (BoJ) had intervened in currency markets on Thursday, while a renowned expert called for a further strengthening of the Japanese currency.

The Federal Reserve lowered expectations for rate hikes this year bringing their forecast down to two increases in 2016 compared to the previous four and dovish comments from Fed chair Janet Yellen explaining that "global economic and financial developments continue to pose risks” and disregarding the recent uptick in inflation put downward pressure on the dollar.

In this light, the USD/JPY hit the intraday low of 110.67, but a rapid bounce back to its current 111.60 sparked some speculation that the BoJ may have “intervened” in markets in order to protect weakness in the yen.

These moves also came after Japan reported on Thursday that the adjusted trade balance for February came in at a surplus of ¥170 billion, narrower than the ¥240 billion seen. In a worrying sign for the world’s third-largest economy, exports fell 4.0% year-on-year, more than the 3.1% drop forecast by analysts.

Meanwhile, GBP/JPY was trading near session highs, as investors reacted to the decision by the Bank of England (BoE) to maintain monetary policy unchanged.

The yen was boosted after the BoJ made no change to monetary policy, in a widely anticipated decision, as it assesses the economic impact of its decision in January to deploy negative interest rates.

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USD/JPY Weekly: Yen Jumps, Intervention Suspected & Anticipated The yen is worrying Bank of Japan (BoJ) Governor Haruhiko Kuroda once again, as it grew last week to an extent that seems to have warranted the bank's intervention.

The pair ended the week down 1.97% at 111.57, losing 7.27% since the start of the year.

Monday saw little action for the pair, as traders mostly chose to sit tight ahead of the BoJ's meeting.

Tuesday's Bank of Japan meeting brought no change to the monetary policy, on par with the expectations of markets. However, Kuroda has proven that he is willing to do anything and tends to surprise markets, which reacted to the BoJ's passivity with higher demand for the yen.

Traders also digested US retail sales data that returned from growth to contraction once again. The pair booked significant losses on Tuesday.

The middle of the week saw high volatility on the pair, as the yen initially gained against the dollar on the back of Kuroda's testimony before the parliament. Answering an opposition lawmaker's question, Kuroda said that the BoJ can slash the rates down to -0.5% if the need arises. This statement sent the yen down, although Kuroda's efforts were 'sabotaged' by the Federal Reserve (Fed).

The Federal Open Market Committee (FOMC), the body of the Fed that decides monetary policy, cut its outlook for year 2016 to indicate only two rate hikes, instead of the earlier assumed four. Investors, whose expectations concerning rate hikes had grown significantly over the last month, were disappointed and this sent the dollar significantly lower.

The FOMC also cut its GDP projections for 2016 to 2.2% from 2.4%, which hurt the greenback further. Kuroda's stated possibility of a -0.50% rate had therefore a limited effect on the pair, which closed the day with great losses after the initial gains.

The US CPI data were released also during the day, showing slowdown on a yearly basis to 1% from 1.4% and a decline to -0.2% from 0% on a monthly basis. These numbers are usually the news of the day, but the FOMC meeting made them nearly irrelevant.

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Japan press - "Strong yen seen persisting into April" From the Nikkei overnight Argues yen may continue strong against the USD "in April and beyond"

• Japanese companies are likely to continue repatriating overseas earnings after the March 31 fiscal year-end
• Worries over Europe (thus yen safe haven flows)
• Worries over Brexit (and again, thus yen safe haven flows)
• Seasonal April strength for yen "in recent years"

The full article is here, nothing ground-breaking but a useful background read

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Japanese inflation data due today during the Asian time zone It might be a holiday (Good Friday) nearly everywhere else, but Japan is open today Due at 2330GMT (note that time, its 20 minutes earlier than when we normally get Japanese data)

• NationalCPI y/y for February, expected is 0.3%, prior was 0.0%
• National CPI y/y excluding Fresh Food for February, expected is 0.0%, prior was 0.0%
• National CPI excluding Food, Energy y/y for February, expected is 0.8%, prior was 0.7%
• TokyoCPI y/y for March, expected is 0.0%, prior was 0.1% (Tokyo CPI data is available a month earlier than the National CPI)
• Tokyo CPI excluding Fresh Food y/y for March, expected is -0.2%, prior was -0.1%
• Tokyo CPI excluding Food, Energy y/y for March, expected is 0.5%, prior was 0.5%

On the days we get the official inflation data we also get the Bank of Japan's own CPI measure. It's a 'national' CPI excluding fresh food and energy:

• expected 1.1% y/y, prior 1.1% y/y
• This is due much later, at 0500GMT

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The BOJ publish its own measure of CPI. February comes in at 1.1% y/y And now, it's the BOJ's own measure of inflation

• It's a 'national' measure
• It excludes fresh food and energy

Comes in at 1.1% y/y

• expected 1.1% y/y, prior 1.1% y/y

More data out simultaneously:

• (Final January) Leading Index 101.8 (prelim was 101.4)
• (Final January) Coincident Index 113.5 (prelim was 113.8)

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• Earlier today we got official CPI data from Japan, here
• We also got Services PPI for February, in at +0.2% y/y(expected 0.2%, prior 0.3%)

USD/JPY forecast for the week of March 28, 2016

USD/PY forecast for the week of April 4, 2016 The USD/JPY pair fell during the course of the week, testing the recent consolidation area yet again. The market is running into a significant amount of support just below though, so this point in time we are bit hesitant to start selling this particular pair. On the other hand though, we don’t want to buy this market, because there is no sign of a bounce quite yet and as a result we think that trading from the short-term charts are about the only thing that you can do at this point in time.

USD/JPY forecast for the week of April 11, 2016 The USD/JPY pair broke down during the course of the week, clearing the 110 level. With this, the market looks as if we could continue to go much lower, but at this point in time it’s likely that we could get a bit of a rally, but that rally should send sellers back into the market in order to take advantage of value in the Japanese yen. An exhaustive candle on a short-term chart could be reason enough to start selling, especially if it is just below the 110 level.

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USD/JPY forecast for the week of May 16, 2016

The USD/JPY pair initially tried to rally during the course of the week but as you can see struggled just below the 110 level. This is an area that has psychological resistance to it, and the fact that we pullback should be much of a surprise. We formed a hammer from the previous week though, so there’s still should be quite a bit of volatility just waiting to happen in this marketplace. Simply put, if we can get a daily close above the 110 level, we would be willing to start buying on a longer-term perspective.

USD/JPY creeps above 109.00 to session high - orders