x
Breaking News
0

USD/JPY: BoJ Kept Its Policy Unchanged, As Widely Expected

By Growth AcesForexMar 16, 2017 08:04AM ET
www.investing.com/analysis/usd-jpy:-boj-kept-its-policy-unchanged,-as-widely-expected-200179181
USD/JPY: BoJ Kept Its Policy Unchanged, As Widely Expected
By Growth Aces   |  Mar 16, 2017 08:04AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

USD/JPY: BoJ kept its policy unchanged, as widely expected
Macroeconomic overview
The Bank of Japan maintained its short-term interest rate target of minus 0.1 and a pledge to guide the 10-Year government bond yield at around zero percent. It also kept intact a loose pledge to maintain the pace of its annual increase in Japanese government bond holdings, which is JPY 80 trillion.

The move was in stark contrast to the U.S. Federal Reserve's decision hours earlier to hike interest rates for the second time in three months in an effort to return policy to a more normal footing.

Bank of Japan Governor Haruhiko Kuroda made clear the BOJ would not follow the Fed's footsteps any time soon, saying that Japan still needed massive monetary support with inflation distant from the bank's 2% target and risks to growth skewed to the downside. He shrugged off market speculation the BOJ may raise its target on bond yields later this year, when consumer inflation is expected to approach 1% due mostly to a rebound in fuel costs and rising import prices from a weak yen. Instead of looking at a single price data point, the BOJ will take into account various factors like the health of the economy and long-term inflation expectations, he said.

Japan's long-stagnant economy has shown signs of life in recent months, with exports and factory output benefitting from a recovery in global demand. Core consumer prices rose for the first time in over a year in January and analysts expect them to continue to pick up slowly but steadily. That has led to a dramatic shift in market expectations, with the market predicting the BOJ's next move would be to start scaling back its ultra-easy policy. The BOJ may be forced to raise its yield target to avoid ramping up bond purchases if Japanese long-term interest rates track global bond yield rises, which are being driven by expectations of higher U.S. interest rates. Kuroda rebuffed such a view, saying that he does not see the need to raise the yield target just because the Fed is doing so.

U.S. President Donald Trump has accused Japan for using "money supply" to weaken the yen and give its exports an unfair trade advantage. Kuroda stressed the BOJ's easing was aimed at beating deflation, and that interest rate differentials between Japan and the United States alone would not determine currency moves.

Technical analysis
The USD/JPY dropped after yesterday’s Fed statement, as we expected. It broke below 113.11 support (61.8% retrace of the February-March rise). 112.59 (76.4% retrace) is now unmasked for a retest.

USD/JPY Chart
USD/JPY Chart

Trading strategy
We have lowered the target on the USD/JPY short to 112.90.

Source: GrowthAces.com - your daily forex trading strategies newsletter

USD/JPY: BoJ Kept Its Policy Unchanged, As Widely Expected
 
USD/JPY: BoJ Kept Its Policy Unchanged, As Widely Expected

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

 
Are you sure you want to delete this chart?
 
Write your thoughts here
 
Replace the attached chart with a new chart ?
Post
Post also to:
1000
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
 
Replace the attached chart with a new chart ?
Post 1000
Please wait a minute before you try to comment again.
 
 
 
Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Add Chart to Comment
Disclaimer: Our research is based on information obtained from or are based upon public information sources. We consider them to be reliable but we assume no liability of their completeness and accuracy. All analyses and opinions found in our reports are the independent judgment of their authors at the time of writing. The opinions are for information purposes only and are neither an offer nor a recommendation to purchase or sell securities. By reading our research you fully agree we are not liable for any decisions you make regarding any information provided in our reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise you to contact a certified investment advisor and we encourage you to do your own research before making any investment decision. For further information see http://growthaces.com
Continue with Google
or
Sign up with Email