There are two possibilities:
- If Japanese consumers react negatively, they reduce spending, and U/J would fall down as a result, but it also increases the expectation of further stimulus from BOJ : U/J would be up despite of negative spending.
- If Japanese consumers react positive, they don’t reduce spending, and accept tax hike. The result would be : Nikkei 225 would react very positive, and transfer to U/J . U/J is up as a result.
In both cases, the bias of USDJPY still be .
Look at on the chart, Nikkei225 chart. I show a key . If Nikkei225 breaks this , this is the time to LONG USDJPY . Thus, to trade USDJPY this week, please be patient, wait until Nikkei 225 officially cross the , and focus the reaction of Japanese consumer reaction.
We have three such indicators this week:
- Leading Economic Index on Monday
- coincident Index on Monday
- BOJ Monthly Economic Survey on Wednesday
Thus, check it to predict future trend.
Economic data is not useless.