July 31, 2018 04:52: Bank of Japan monetary policy announcement [From Mr. Rikio Shima’s email newsletter]
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Regarding today’s Bank of Japan monetary policy announcement that many market participants are looking at, Mr. Shima views it as follows. Please see a portion of the early-morning newsletter distributed from the investment newsletter “Shima Rikio’s Practical Real Trade” provided by GogoJungle.
Today's forex markets in Tokyo and London hardly moved. A bit disappointing. Everyone is waiting for BOJ tomorrow. Regarding policy changes, about 70% of people say “postpone to September or October.”
As to whether the BOJ will actually make a policy change, market consensus sees the likelihood as less than 30%. However, personally I think it is quite possible. This is because avoiding a yen surge is the most important, and we don’t know whether, at the September or October BOJ Policy Board meeting, the yen will be at the same weak level as now. If it were to fall below 105 yen, policy could come to a halt for a time.
The announcement is around noon, but expectations are high, so as noon approaches, the market is likely to become volatile.
As a basic scenario, the BOJ may change policy, so as the time approaches, yen-buying pressure will gradually rise; however, after the announcement, depending on the contents, and as the saying goes “Sell the fact, Buy the rumor,” the market may see a rebound in areas where it has fallen. However, because US tech is expected to continue dragging down US stocks, the dollar/yen recovery is likely to be limited.
“Shima Rikio’s Practical Real Trade” (Rikio Shima) quote.
We should be careful about sudden market moves due to surprises. (Editorial staff)
Dollar/Yen, daily chart.
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