Bank of Japan likely to stand pat in March

The Japanese central bank is set to meet this week for its monetary policy decision. According to a DBS Bank research report, the Bank of Japan is likely to stand pat despite the recent data swings and market volatility. Industrial production and retail sales dropped in January. However, the PMI and the production forecast index point to a notable rebound in the later part of the first quarter.

In the meantime, the government is expected to upwardly revise the fourth quarter 2017 GDP estimate to 0.7 percent from 0.5 percent this week. In all, the Bank of Japan should stay confident about the short-term growth outlook and refrain from easing monetary policy further. The Bank of Japan is not in a hurry to tighten as well, given that CPI data continue to be weak and the reflation outlook continues to be elusive.

“Governor Haruhiko Kuroda said last Friday that the BOJ will consider a quantitative easing exit around FY2019, hinting at the intention to end the negative interest rate policy and raise the long-term yield target in 1-2 years”, noted DBS Bank.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Japanese Yen was neutral at -34.4612, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -7.47334. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest