After a quiet week, USD/JPY has posted gains on Thursday. In the North American session, the pair is trading at 111.58, up 0.38% on the day. On the release front, U.S. numbers were soft. Unemployment claims climbed to 229 thousand, above the estimate of 225 thousand. Canadian New Housing Price Index declined 0.1%, after posting five straight readings of 0.0%. Later in the day, the focus shifts to the Bank of Japan, which will release a rate statement.

The Bank of Japan holds a policy meeting later on Thursday, and investors should expect “more of the same” with regard to monetary policy. There is little pressure on policymakers to raise interest rates, especially with the Federal Reserve and ECB putting a freeze on rate hikes for the time being. However, the BoJ is concerned that the Japanese yen could rise if the global economy takes a downturn in 2019, which would weigh on exports and push low inflation levels even lower. If the yen does move higher, the BoJ will have to consider additional stimulus in order to keep the currency in check. This means that it’s unlikely that the safe-haven yen will be posting significant gains in the next few months, barring geopolitical turmoil.

What can we expect from the Fed in the next few months? In the U.S., consumer inflation remains soft, which means there is little pressure on policymakers to raise rates in the near future. In February, Core CPI edged down to 0.1%, while CPI remained steady at 0.2%.There is less than a 2% chance that the Fed will raise rates at the March or May meetings, according to the CME Group. Policymakers have been signaling that the Fed could stay on the sidelines until the second half of 2019, and this stance was underscored by Fed Chair Powell in a television interview on Sunday. Powell left no doubt about where the Fed stands, saying that the Fed would remain patient and was in no hurry to change interest rate policy. The dovish stance of the Fed could weigh on the dollar, as a lack of rate hikes makes the greenback less attractive to investors.

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