Traders say that expectations for range-trading on USD/JPY are increasing in coming sessions with the key risk events next week, Japan CPI data and the BOJ report having muted effect on the market, particularly from the BOJ report with inflation expectations already leaked to the press. As we reported back on April 16th, the Nikkei said that the BOJ forecast for CPI is expected to rise to 0.2/0.3%, with the Yomiuri reporting overnight a similar forecast of 0.3% for the report.
BOJ Fukui has already widely hinted in recent weeks that CPI due Friday, will continue to be soft with prior declines in oil prices expected to feed through to prices. USD/JPY is at 118.83 currently after this morning's rally stalled near 119.00. Fresh carry trade demand for JPY crosses fuelled the rally in the wake of firm US stock markets. Offers remain at 119.00 with stops at 119.05 to 119.20.
Dealers however are noting the further fall in JPY vols and increased expectations that with next week's risk event impact muted by the press reports, that USD/JPY will range-trade into the Golden Week holidays. 117-120 is seen by some, with option-related buying from 117.50 and similar option-related selling ahead of 120.00.
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