The Bank of Japan has left rates unchanged at -0.1 % with the option of cutting rates further in the future. Overall it has changed some operations within its policy, but the general feeling is one of fiddling with the details as opposed to any substantive new policies.
Among the changes are,
TO BUY JGBS SO 10 YR YIELD HOVERS AROUND 0 PCT
SCRAPS RANGE FOR DURATION OF JGBS THAT BOJ BUYS
ADOPTS COMMITMENT TO LET INFLATION OVERSHOOT ABOVE 2 PCT
BOJ CAN CUT SHORT TERM POLICY RATE, TARGET LEVEL OF LONG TERM RATES IN FUTURE EASING
BOJ MAY ACCELERATE EXPANSION OF MONETARY BASE AS FUTURE POLICY OPTION
Additionally, they have tinkered with their ETF purchasing policy.
USD/JPY has had a roller coaster ride just ahead and after the announcement. Trading in a 101/102.50 range.
The price action is somewhat confusing it must be said, given that none of the BoJ actions are show stoppers. One imagines that the short-term news traders have sold the original headline, and in a market with below par liquidity have just as quickly had to cover them back when 101.00 did not break. The day belongs to very short term momentum traders or as I like to call them the FOMO (fear of missing out) traders.
The Bank of Japan has done what every other major central bank this month has done so far. That is hold and wait to see the Federal Reserve does this evening and hope they do the heavy lifting.
To that effect, although we have seen some dynamic ranges on USD/JPY and JPY Crosses, it is hard to visualise a meaningful break-out in any, ahead of the FOMC announcement tonight. USD/JPY appears well supported at the 101.00 area for now. Resistance is at 102.80 and then 103.00.
About Jeffrey Halley
Based in Singapore, Jeffrey has over 25 years experience in the financial markets, having traded currencies, options, precious metals and futures. Jeffrey started his career at Barclays Bank in New Zealand. However he has spent most of it in London and Asia. Jeffrey focuses on the Asia time zone across asset classes. A regular commentator on business news TV and Radio, he is originally from New Zealand and holds an MBA from Cass Business School, London.