The Japanese Yen will be in play tonight with the Bank of Japan interest rate decision following on the heels of labor market and unemployment data.
Once again, the Bank of Japan is not expected to raise or cut interest rates because they have no room to do so. Even though retail sales were stronger than expected and rose unexpectedly for the second month in a row, the trend of consumption is slow because weak wage growth remains one of the country’s biggest problems. The unemployment rate is expected to remain at a 9 year low, but troubles in the US and tight credit conditions globally will force the Bank of Japan to stand aside for the remainder of the year. Deflation still remains a bigger problem than inflation in Japan. Carry trades are stronger as the US stock market extends Friday’s gains. In the immediate future, further strength in US and Asian stocks would undoubtedly take the Japanese Yen crosses higher as well.
[B]Written by Kathy Lien, Chief Currency Strategist[/B]