Once the Fed shuffles off the stage, all eyes will turn to the BoJ, which starts a two-day meeting that is likely to result in extreme volatility across risk assets and all yen pairs.
The first act already closed as Japan’s Prime Minister unveiled a $265 billion stimulus package Wednesday to help provide much-needed support to the world’s third largest economy. While the size of the package surprised markets, the release was less clear on detail -- how much, for example, will come in the form of direct government spending? The question now is will the BoJ ease or take a ‘wait and see’ approach?
Yen Technicals
The daily yen continues to reflect volatility, sharply reversing Tuesday’s sharp move higher in Wednesday trade -- trading lower at 8744 -- but finding some support in this area. However, given the uncertainty surrounding the next two days, the yen index is likely to trade between 8900 to the upside and 8550 on the downside.