Vital Information About the BOJ Meeting
An advance knowledge of the scheduled dates upon which important economic data releases are going to be made is of great important to any serious investor. The economic calendar outlines these key events in order for traders to know when to expect an increased amount of volatility in the financial markets and plan for their trading strategy accordingly. While certain investors have a preference for steering clear of investments around these periods in order to minimise their chance of experiencing a loss, others prefer to plan for a strategy that takes into account expert opinions and predictions for the outcomes of these announcements so that they can make an attempt at taking up a position that will allow them to capitalise on the expected outcome and therefore generate a larger profit. There are numerous key dates which can be found on the economic calendar, however one of the most important to anyone with an interest in the foreign currency exchange market is the BOJ meeting. Knowing when these meetings are scheduled to occur allows the skilled trader to prepare in advance for the volatility that will certainly surround the event.
What is the BOJ?
BOJ is an abbreviation which stands for the Bank of Japan. The country’s central bank is a juridical body which is based upon the Bank of Japan Act. It is neither a private corporation nor a government agency. Sometimes, the Bank of Japan is referred to as Nichigin and it has its headquarters in Chuo in Tokyo. The Bank of Japan Act has set an objective for the bank to carry out all controls of currency and monetary policy as well as to issue the nation’s bank notes. It is also charged with ensuring the smooth settlement of funds among financial institutions and banks in order to maintain stability within the Japanese financial system and thus contributing to the strong development of the country’s economy. The Bank of Japan, and specifically its Governor together with the body’s Monetary Policy Board has a significant impact upon Japan’s economic policies and their decisions about the Japanese Yen’s interest rate affect economies around the globe.
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Who is on the BOJ Monetary Policy Board?
The Bank of Japan’s Monetary Policy Board has been established as the highest body for making policy decisions in the bank. As part of their remit, the Policy Board is charged with determining guidelines for monetary and currency control while setting principles for performing the Bank’s operations and overseeing the duties of all of the Bank’s Officers with the exception of its Counsellors and Auditors. The officers of the Bank are members of the Policy Board and this includes the Deputy Governor, Governor, Auditors, Counsellors and Executive Directions. The current members of the BOJ Monetary Policy Board include:
How Frequently is the BOJ Meeting Held?
Meetings of the BOJ Monetary Policy Board are held at least once a month and sometimes twice, with the first of those meetings taking 2 days. At the board meetings, the members of the board form guidelines for the nation’s financial operations for the period until the next meeting while formulating the Bank of Japan’s view of any recent financial and economic developments. The 2nd meeting of each month only takes one day during which the board members are charged with reviewing any decisions which were made at the first meeting. The Monetary Policy Board meeting schedule is released towards the end of every quarter for the 6 months to follow. The BOJ holds monetary policy meets quite frequently, and certainly more often than many of the central banks of other nations such as the US Federal Reserve who only have 8 meetings per year.
When is the Next BOJ Meeting Scheduled to be Held?
A knowledge of the dates of upcoming BOJ meetings is essential for any serious trader. In this table you will see all of the BOJ meeting dates for 2016.
BOJ Meeting Dates for 2016
|January||28th and 29th|
|March||14th and 15th|
|April||27th and 28th|
|June||15th and 16th|
|July||28th and 29th|
|September||20th and 21st|
|October/November||31st and 1st|
|December||19th and 20th|
Why is the BOJ Meeting Relevant to Forex Traders?
As the majority of investors enjoy success in the Forex market due to the use of fundamental analysis, an advance knowledge of key dates on the economic calendar, such as those of the BOJ meeting are essential to being able to plan a trading strategy. BOJ meetings have importance to traders and particularly those who trade the Forex market because the economic decisions taken by the Monetary Policy Board of the Bank of Japan affect the Yen currency and how it interacts with other currency pairs around the globe. Any impact upon Japan’s monetary policy will always have a knock on effect with other economies around the world since the Yen is recognised as one of the world’s major currencies, so it is easy to see why the market is increasingly volatile around the time of this economic event until the outcome has become clear to investors. If an investor has enough time to make advance preparations for their strategy before the data is announced, they are much more likely to enjoy a successful trading experience.
Strategies for Trading Economic Announcements Like the BOJ Meeting
Any experienced investor knows that there will always been rapid short term asset price movements within the financial market around the time that a major piece of financial news is going to be issued. When considering the Forex market, this is especially true, particularly when the announcement will have an impact upon a country’s foreign currency reserves and interest rate which is the case when looking at the BOJ meeting. This event has a major effect upon global currency pairs, so any trader who wants to be certain of enjoying a successful trade in the foreign exchange market at this time must make themselves aware of the days on which these meetings will be held in order to plan and advance trading strategy that takes into account the fast movements in the market.
While it is true to say that many traders prefer to limit their financial risk by avoiding placing trades during this volatile trading time, there are many others who would prefer to take advantage of the market’s volatility. There are a couple of techniques which can be used by investors who want to try their hand at Forex trading at this time but who are looking for a strategy which is most likely to succeed without taking undue risks with their money.
The Whipsaw technique is very popular with experienced investors and is suitable for use when there are major impact economic announcements, such as those related to major economy interest rate decisions. On these occasions, prices whipsaw up and down very rapidly – when it goes up rapidly it stops out shorts and when it moves down it will stop out longs. However it is possible to use this knowledge to make a profit. The key is to enter two different trades, one short, one long, and these must be as close as possible to the median price of the move which leads into the whipsaw, setting a take profit on both of these trades of 10 to 15 pips in order to remain in the safe zone. It is important to refrain from setting a stop loss as then it will not matter if the price moves up or down in the initial instance as you will not get stopped out. It is key to remember however that the market must be moving within tight ranges before the release of the data, as that way the whipsaw can easily reach the stops. Should the price be going down or up before the news release, there is less chance of a whipsaw taking place. You should also take care to make your entry as close to the mid-point as you can because otherwise you will be exposed at the end of the range.