The Bank of Japan (BOJ) left its monetary policy setting unchanged after concluding its two-day September monetary policy review meeting on Friday. The central bank left the key rate steady at -10bps while maintaining a 10yr JGB yield target at 0.00%.

Japan’s government raised the FY2021 GDP estimate +4.0% from the previous forecast of +3.4% in July amid stimulus optimism, the latest estimate by the Cabinet Office showed on Friday.

The forecast 4.0% growth for next fiscal year would be the fastest annual expansion on record, if realized, since comparable data became available in 1995.

As per a report, Policymakers need to keep a close watch “on downside risks to the economy in Japan and overseas from the pandemic and impacts from moves in financial capital markets.”“Overall consumer prices are forecast to fall 0.6% for this fiscal year, from a 0.3% decline expected previously.“

“In fiscal 2021, overall prices will grow 0.4%, the government said, revised down slightly from the previous forecast of a 0.5% increase.”“For the current fiscal year that ends in March 2021, the government cut its gross domestic product forecast to a 5.2% contraction, which would be the biggest annual slump on record.”

On the other hand, Japanese shares inched lower on Friday as investors fretted over the risks that surging COVID-19 cases in Tokyo could pose to recovery prospects in the world’s third-largest economy. The Nikkei share average .N225 lost 0.19% to 26,756.89 by the midday break, while the broader Topix. TOPX was nearly flat at 1,791.84 ahead of a central bank policy decision. Both the indexes, however, were on track to post weekly gains.

USD/JPY 4 Hour Chart:

Support: 102.79 (S1), 102.49 (S2), 102.10 (S3).

Resistance: 103.48 (R1), 103.86 (R2), 104.16 (R3).

In the prevailing atmosphere which is weak for yen against greenback, we expect a bullish atmosphere for USD/JPY.