Yen Extends Gains, BoJ MonPol Decision Up Next Week

USD/JPY sales continued on Thursday but the round figure of Y114.00 limited losses. A poor showing from U.S. equities kept the pair on the back foot, as participants mulled the prospects for imminent Fed tightening.

• The rate sits at Y114.15 as we type, a touch lower on the day. A clean breach of the aforementioned Y114.00 figure would shift bearish focus to Dec 21 low of Y113.56, followed by Dec 17 low of Y113.14. On the flip side, a jump above Jan 11 high of Y115.68 would bring Jan 4 cycle high of Y116.35 into play.
• Japan's factory gate price growth slowed to +8.5% Y/Y in December from +9.2% recorded in November, against median estimate of +8.8%.
• Looking ahead, core machine orders (Monday), final industrial output (Tuesday), trade balance (Thursday) & national CPI (Friday) take focus on the data front next week.
• Elsewhere, the BoJ will deliver their next monetary policy decision on Tuesday. Note that reports were doing the rounds that policymakers might raise their FY2022 inflation forecast to +1.0% Y/Y.
• Separately, Reuters reported that the central bank are discussing how to communicate an eventual interest rate hike, which could be delivered even before the +2.0% Y/Y CPI target is met (albeit the BoJ are unlikely to hike as soon as this year).