 Hello, welcome to this week's CMC Markets currency snapshot with myself Jasper Lawler, market analyst. This week we'll be talking about dollar yen. Now the two components of this particular currency pair, both of their central banks have been in action this week. We've had this Federal Reserve just yesterday ending their quantitative easing program with a slightly more hawkish bias leaning towards perhaps a sooner interest rate hike than some were expecting, but tomorrow we have the Bank of Japan. And what we're looking at is a very different picture whereby in Japan inflation is perhaps not as strong as the Bank of Japan and Government Corridor would like. And so the net effect from there is that there's a policy divergence. The US are looking closer to raising rates, whereas in Japan they're looking at potentially more quantitative easing, more stimulus. And so what that means is that dollar yen's hit 110. It's pulled back from there, but we're right back towards 109 again after this Fed meeting. So the question is going into this Bank of Japan meeting, what does that mean? Can we hit 110 again? So just to summarize, we've had the Federal Reserve taper quantitative easing, but what was slightly surprising is that their outlook for inflation was stronger than the market was expecting. We've seen a downtick in CPI and other measures of inflation recently, but the Fed described that as temporary, mostly relating to the drop in oil prices. And they expect their 2% target to be comfortably hit in the near term. So that's quite positive for inflation. And if you're expecting that about inflation, you really need to hike rates in anticipation of that. And so more hawkers than people were expecting. And so then we flip over to the Bank of Japan. Firstly, we have CPI inflation data from Japan. And that's obviously the main thing that the Bank of Japan are targeting, both higher inflation to bring Japan out of this decade long period of deflation. And part of the method they would be doing that is through the exchange rate targeting a weaker yen. So that exchange rate element of things has partly been achieved. Like I said, dollar yen is now at 110, slightly below it, but we've hit 110. So then the question is, do the Bank of Japan really need the dollar yen to be any higher or the yen to be any weaker? Arguably they do, because inflation does appear to be falling back. And there is a bit of debate amongst the Bank of Japan as to whether this policy is actually right. So there could be two outcomes from that. One would be that they just cancel this policy outright. And that would actually be a negative to dollar yen. But in the short term, what the more likely scenario seems like is that actually pile on more stimulus and weaken the yen even further. And that could possibly see dollar yen at 110 and then perhaps higher towards 112. So looking at the chart here, what we have in front of us is a slightly shorter term, four-hour candlestick chart. Makes sense to look at a slightly shorter timeframe if you are orientating your trading around an upcoming event such as the CPI in Bank of Japan meeting. This was a inverse head and shoulders pattern that I pointed out in the chart forum just a few days back. That has now reached its objective just above 109 at about 109.10. So with the pattern having reached its objective, there is some possibility of a pullback. But if we look this recent area of consolidation where a top was in the sort of 108.25-type territory, if we do see a slight pullback, that could be an area where the price would extend up to 110. Should we see some dovish commentary and perhaps the instigation of more stimulus from the Bank of Japan? That's it for this week's CMC Markets currency snapshot. We were looking at dollar yen. The key here is just the policy divergence between the central banks. At the moment, the trend is that the Bank of Japan are looking towards a looser monetary policy whereas the Fed are tightening monetary policy. So any change to that affects dollar yen negatively and a continuation of that could push dollar yen above 110.