On Monday, March 17, speculation over the Bank of Japan’s (BoJ) upcoming interest rate decision will drive USD/JPY movements. President Trump’s tariff policies have triggered economic uncertainties, overshadowing optimism about Japan’s spring wage negotiations (Shunto).
Recent inflation reports have also eased expectations for a March rate hike as inflationary pressures remain subdued. BoJ Deputy Governor Shinichi Uchida recently downplayed the chances of a near-term rate hike, saying:
“The pace is not such that we need to increase interest rates each time.”
Beyond assessing the impact of tariffs on Japan’s economy, the BoJ may also want to:
Last week, Japan’s Rengo, the leading national trade union center, secured a 3.84% base pay rise, below its 4.51% target. Additionally, Rengo achieved a 5.46% average pay rise, below its demand of 6.09%.
Despite falling short of demands, base pay and average pay rises accelerated from last year’s 3.7% base pay rise and 5.28% average pay hike. This upward trend may fuel hopes that higher wages could boost consumer spending, supporting a more hawkish BoJ rate path.
Following Rengo’s updates, investors should track BoJ commentary on Monday, March 17. Support for a near-term rate hike could drag the USD/JPY pair toward the March 11 low of 146.537. Conversely, calls for caution amid Trump’s tariff policies fueled uncertainty could push the pair above 150.
East Asia Econ, a research service specializing in the markets and macro of China, Japan, Korea, and Taiwan, commented on the Shunto 2025 results:
“Today’s shunto 2025 results are constructive, but not a game changer. Upside risks from other dynamics are bigger: part-time wages, the output gap, inflation expectations, processed food prices, rent, and pent-up inflation pressure in both PPI and public services prices.”
The BoJ may take time to assess whether higher wages will sustainably lift consumption and inflationary pressures.
According to the latest Reuters poll (March 4-11):
Later in the US session, US retail sales figures will be crucial amid rising recession fears. Economists forecast retail sales to rise 0.7% month-on-month (MoM) in February, following a 0.9% fall in January.
Explore expert forecasts and trade setups for USD/JPY in our latest market analysis here.
While USD/JPY remains a key focus, economic data from China will influence near-term AUD/USD trends.
On March 17, Chinese data, including housing prices, industrial production, fixed asset investment, retail sales, and unemployment figures, will influence market sentiment.
Potential AUD/USD trends include:
For a comprehensive analysis of AUD/USD trends and trade data insights, visit our detailed reports here.
Later in the US session, US retail sales could influence the US-Aussie interest rate differential.
Key macroeconomic drivers influencing forex markets include:
Read our expert analysis on USD/JPY and AUD/USD forecasts here for deeper insights.
TEST 30 He has written extensively for a broader audience and his current focus is on developments relating to the financial markets including, but not limited to currencies, commodities, alternative asset classes, and global equities.