This week, the Bank of Japan will take center stage, with economists widely expecting policymakers to keep interest rates at 0.5%. Forward guidance will be pivotal, given recent economic data and Takaichi’s election win. Although the BoJ interest rate decision, forward guidance, and GDP and inflation forecasts will influence USD/JPY trends, traders should closely monitor upcoming economic data releases.

Japanese Consumer Confidence in Focus

On Wednesday, October 29, consumer confidence figures will provide insights into household spending trends. Economists forecast the Consumer Confidence Index to rise from 35.3 in September to 35.6 in October.

A higher-than-expected reading could signal a pickup in consumer spending, fueling demand-driven inflation. Uptrends in household spending and inflation would support a more hawkish BoJ rate path, lifting demand for the yen. On the other hand, a lower print may suggest a softer inflation outlook, weighing on the yen.

Bank of Japan Interest Rate Decision, Governor Ueda, and Forecasts in the Spotlight

While consumer confidence is a key stat, the Bank of Japan’s interest rate decision on Thursday, October 30, will be the main event. GDP and inflation forecasts and Governor Kazuo Ueda’s press conference will also be key drivers for the week.

Barring a surprise rate hike, traders should consider the BoJ’s forecasts and Governor Kazuo Ueda’s press conference. Upward revisions to GDP and inflation could fuel speculation about a December or January hike, lifting the yen. Conversely, weaker forecasts could sink bets of monetary policy tightening and weigh on the yen.

However, Governor Ueda will have the final say. Views on Prime Minister Takaichi’s monetary policy stance and plans for fiscal stimulus would likely be crucial near-term USD/JPY trends.