USD/JPY slides below 148.00 on BOJ minutes with eyes on yields, Fed’s ‘dot plot’

• USD/JPY takes offers to extend the previous day’s pullback from a one-week high.
• BOJ Minutes defend easy money policy despite raising concerns on weak yen.
• Yields struggle as firmer US data, hawkish Fed bets jostle with hopes of Fed’s slower rate hikes from December.
• Second-tier US data can entertain the pair traders but FOMC is the key to clear directions.

USD/JPY stands on slippery grounds near 147.80 even as the Bank of Japan’s (BOJ) monetary policy meeting minutes defend the easy money policies during early Wednesday. In doing so, the yen pair renews its intraday low while declining for the second consecutive day as traders prepare for the all-important Federal Open Market Committee (FOMC) meeting.

The latest BOJ Minutes praised Tokyo’s economic transition while also stating, “A few member said there is still distance from Japan achieving BOJ price target in stable, sustained manner.” The Minute statement additionally mentioned that several members said weak yen could hurt households, small firms and non-manufacturers.

Also read: BoJ Minutes: Members agreed Japan's economy is picking up

While refreshing the intraday low, the USD/JPY pair fails to justify the recently sluggish US Treasury yields, as well as the BOJ’s defense to the easy money policies. That said, the US 10-year Treasury yields remain inactive at around 4.05%, following an upbeat start to November.

It’s worth noting that the yen pair cheered the broad US dollar weakness, as well as the chatters surrounding Japan’s market intervention the previous day to snap a two-day uptrend. That said, the policymakers conveyed the heavy amount spent during September to defend the yen but refrained from details.

On the other hand, the US dollar struggled to cheer the firmer data amid the indecision on how and when the US Federal Reserve (Fed) will pedal the brake of the aggressive rate hike trajectory. It should be observed that the US JOLTS Job Openings increased to 10.717M in September versus 10.0M forecast and upwardly revised 10.28M previous readings. Further, US ISM Manufacturing PMI increased to 50.2 in October versus 50.0 market forecasts and 50.9 prior. On the same line, final readings of the US S&P Global Manufacturing PMI for October rose past 49.9 initial forecasts to 50.4 but stayed below 52.0 readings for the previous month.

Amid these plays, the S&P 500 Futures print mild gains even as Wall Street closed in the red.

To sum up, the USD/JPY struggles to portray the market’s indecision amid the Japanese policymakers’ cautious optimism. However, the pair’s further downside appears limited as the traders await the Fed’s verdict and the US ADP Employment Change for October, expected 193K versus 208K prior.

Also read: Fed November Preview: Is it time for a dovish signal?

Technical analysis

Despite the latest weakness, USD/JPY buyers remain hopeful unless the quote drops below an upward-sloping support line from late August, around 146.20 by the press time.