The yen is weakening considerably against the dollar by mid September,
while the Japanese government is trying to calm the market down. The Minister of Finance Taro Aso said today the BoJ monetary policy is going to stay the same so as to reach the 2% inflation target, but this will require some time. The basic policy features are set by the central bank, Aso said, while any early talks on the QE shutdown may only provoke too much volatility.
This way, Aso smoothed down a bit what the Japanese Prime Minister Shinzo Abe said on Friday, highlighting the fact that the strategy of the QE shutdown is already being worked on. Such talks are not groundless, as the Bank of Japan spends a lot of money on QE in order to avoid deflation, and while it does its job, many politicians want a better effect, and that’s why they criticize the BoJ.
In the middle of this week, the Japanese central bank is going to have another scheduled meeting on monetary policy, where some decisions are to be taken. The interest rate has been negative (0.10%) for a long time, and this is another stimulus measure. After the meeting tomorrow, the traditional press conference will be held, which is of a particular interest.
An uptrend is still dominating when it comes to USDJPY. After a bounce off the midterm channel support the price formed a new short term ascending trend. Meanwhile, on H1, the price is going down towards the support, which may be broken out soon. In case 111.82 gets broken out, another support, the one of the projection channel, may be hit, at 111.30, with the next downtrend target being the midterm support at 110.85.