The USD/JPY is solidly anchored near the previous daily lows.
The Bank of Japan makes its policy announcement.
On Thursday, the USD/JPY was little altered, fluctuating either side of 110.00 with a negative bias.
On efforts above 110, the pair were unconvincing, earning a high of only 110.09 and a low of 109.71.
As the Federal Reserve’s Chair, Jerome Powell, resumed his semi-annual testimony, this time to the Senate, the attention was once again on the possibility of QE tapering in the US by the end of the year.
Markets assimilated comments from some of Powell’s colleagues and other FOMC board members, in addition to his own.
Powell stated that inflation is “far above 2%,” which he believes is unsettling, and that he will adhere to the temporary script.
Meanwhile, Chicago Fed president Evans believes that QE tapering might begin by the end of the year if things go as planned.
He, too, believes that the current spike in inflation will be “transitory,” with a return to more normal inflation in 2022.
On the other hand, St. Louis Fed president Bullard believes it is already time to stop emergency measures because he is less certain that the inflation is transient and is concerned that some of the strength would persist beyond 2022.
In the meantime, the Bank of Japan is expected to publish its policy decision today.
“No change is expected in key settings such as the 0% 10-year JGB yield objective, although there should be some revisions to the growth predictions (down in 2021, up in 2022) and some information on its green lending initiative,” according to Westpac analysts.
The price is attempting to break through the daily support structure, and if it does, the focus will shift to a negative continuation of the current daily trend:/n
