The yen rose and the Nikkei (Japan shares) fell.
The first headlines were that the BOJ did not change its policy.
- maintain -0.1% target for short-term rates
- and 0% cap for 10-year bonds surrender (approx. 0%)
BUT they widened the band where they allowed the 10-year JGB to go from 0.25% to 0.5%. This is actually a long-awaited ‘axis’ from BOJ. It’s a definite mini-pivot, but that’s important given that nothing is expected until April.
More important items from the description:
- increase bond purchases to JPY 9 trillion per month in Q1
- Will review the operation of Yield Curve Control (YCC)
- Making additional JGB purchases on December 22
As the BOJ widens the band for the JGB target, “the functioning of bond markets has deteriorated … If these market conditions continue, this could have a negative impact on financial conditions,” he says.
JPY
JPY
The Japanese yen (JPY) is the official currency of Japan and at the time of this writing is the third most traded currency in the world, after only the US dollar and the euro. forex traders as a safe-haven currency First implemented in 1871, the JPY has a long history and has survived many world wars and other events. It was only in 1971 that the Bank of Japan (BoJ) was established in 1882 and the Japanese government’s full control of the JPY followed. Japan has historically maintained a policy of currency intervention that continues to this day. The BOJ also adheres to a policy of zero-to-near-zero interest rates, and the Japanese government previously had a strict anti-inflation policy. Further changes in the central bank’s monetary policy are closely watched by forex traders. Also, the Overnight Buying Rate is the short-term interbank rate. The BOJ uses the call rate to signal monetary policy changes affecting the JPY. The BOJ also buys both 10- and 20-year Japanese government bonds (JGB) on a monthly basis to inject liquidity into the monetary system. Benchmark The yield on 10-year JGBs helps serve as a key indicator of long-term interest rates. Economic data is also crucial to the JPY. The most important of these publications in Japan are gross domestic product (GDP), Tankan survey (quarterly survey of business sentiment and expectations), international trade, unemployment readings, industrial production and money supply (M2+CDs).
The Japanese yen (JPY) is the official currency of Japan and at the time of this writing is the third most traded currency in the world, after only the US dollar and the euro. forex traders as a safe-haven currency First implemented in 1871, the JPY has a long history and has survived many world wars and other events. It was only in 1971 that the Bank of Japan (BoJ) was established in 1882 and the Japanese government’s full control of the JPY followed. Japan has historically maintained a policy of currency intervention that continues to this day. The BOJ also adheres to a policy of zero-to-near-zero interest rates, and the Japanese government previously had a strict anti-inflation policy. Further changes in the central bank’s monetary policy are closely watched by forex traders. Also, the Overnight Buying Rate is the short-term interbank rate. The BOJ uses the call rate to signal monetary policy changes affecting the JPY. The BOJ also buys both 10- and 20-year Japanese government bonds (JGB) on a monthly basis to inject liquidity into the monetary system. Benchmark The yield on 10-year JGBs helps serve as a key indicator of long-term interest rates. Economic data is also crucial to the JPY. The most important of these publications in Japan are gross domestic product (GDP), Tankan survey (quarterly survey of business sentiment and expectations), international trade, unemployment readings, industrial production and money supply (M2+CDs).
Read This Term up, USD/JPY down around 134.30 while Nikkei down (futures active, down more than 4%, physical closed for lunch break… traders’ indigestion is on the rise as we speak)
