The Bank of Japan published the minutes of its September meeting. The release came out on November 5 at 03:00 Moscow time. Board members agreed that the rate should continue to be raised.
What the minutes are. This is a record of the discussion at the meeting. It is published about a month and a half after the decision itself.
This matters to traders through the yen. It has been strengthening for the second day in a row. USD/JPY slipped to 158.25, EUR/JPY to 177.90.
What did the board debate?
The tone of the discussion favors a hike. Several participants expect inflation to accelerate from the start of autumn.
- Closer to the target. One board member proposed moving the rate toward the target level fairly soon.
- Faster on signals. Another called for accelerating the pace at the first signs of rising price pressure.
- Inflation has approached the guideline. One stated that the core consumer price index has already reached a level comparable to the 2% target.
- The neutral rate remains a mystery. Many find it hard to determine it in advance. This is the level at which policy neither heats up nor slows down the economy.
Why isn't the pair going higher?
The market read the minutes as confirmation of a rate hike in December. On Wednesday USD/JPY bounced off the weekly low of 157.40 but failed to consolidate above it.
- 158.65 - the 200-day average, it has stopped the pair for the third time in a row.
- Japan's Ministry of Finance - talk of it entering the market to support the yen is holding back the dollar's recovery.
What is holding back the dollar?
On the US side the picture is mixed. The October ADP report showed +86,000 private-sector jobs, better than expected. According to FedWatch from CME Group, the probability of a Fed rate hike in December remains above 80%.
Politics worked against the dollar. The Democrats took both chambers of Congress and promised to push for an end to the war with Iran. Oil fell overnight, and US Treasury yields declined.
- 1.63% - how much the dollar lost against the franc over the week.
- 1.19% - losses against the pound.
- 0.88% - losses against the euro.
- 0.16% - the only gain, against the yen.
What's next?
The nearest reference point is the US employment report on Friday. The release time is convenient to check in the economic calendar.
- 157.40, 157.00 and 156.65 - support levels below, 156.65 holds the lower boundary of the range.
- 158.65 - above, a daily close above this level is needed.
Key point: the minutes reinforced bets on a December hike, but without a close above 158.65 the dollar remains boxed in. For weeks like this, it's worth choosing a challenge suited to your market in advance.
Were you holding the yen when the minutes came out?
The release at three in the morning, and on Friday the US employment report. Weeks like this are routine for the yen. The question is about the prop firm's rules: some allow holding a position through a data release, others cut the volume in advance. A gap after a Japanese Ministry of Finance intervention can blow through the daily loss limit without your involvement. These points differ between programs, and you need to read them before paying. Filtering by market and style will weed out those where the yen and overnight swaps are prohibited.