Friday April 26 stands out as a big day for USD/JPY as it is then that the Bank of Japan (BoJ) will hold its April policy meeting and the US will publish Personal Consumption Expenditure (PCE) data for March, including the Federal Reserve’s (Fed) preferred gauge of inflation, the Personal Consumption Expenditure – Price Index.
If PCE inflation in the United States (US) registers a higher-than-expected rise it will boost USD/JPY, by suggesting an even longer delay before the Fed reduces interest rates. If interest rates remain higher for longer it increases demand for USD from foreign investors looking to park their capital.
Likewise if the BoJ increases interest rates at its meeting or drops clues it intends to in the near future, the JPY will appreciate (pushing down USD/JPY).
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