Japanese Yen Stays Pressured As BoJ Reviews Monetary Policy Tools

Japanese Yen Stays Pressured As BoJ Reviews Monetary Policy Tools

It looks like selling attention will be on the yen as markets continue towards the end of Wednesday’s session. Japanese Prime Minister Yoshihide Suga said Wednesday that they will announce on Friday whether they decide to lift the state of emergency due to the coronavirus outbreak.

The dollar and euro are also weak, but both are supported by buying against the yen and franc. On the other hand, commodity currencies remain the strongest to date, led by the New Zealand dollar. The Canadian dollar is in second place thanks to a moderate rise in oil prices.

Meanwhile, Bank of Japan Governor Haruhiko Kuroda told parliament today that various instruments of the Bank of Japan, including the purchase of its ETF, will be the target of the March review. We will study how our instruments affect the markets and see what we can do better. He added that purchases of government bonds have already slowed significantly as markets remain calm. The average bond duration also remained stable at around seven years.
Fx Market Reaction
Commenting on the Bank of Japan’s monetary policy instruments, Governor Haruhiko Kuroda said in a statement Wednesday that the purchase of the bonds is for monetary policy purposes, not for the government.

These comments appear to have a moderate impact on JPY’s performance compared to its main competitors. At the time of writing, USD/JPY is trading at 105.95, up 0.65% on the day. USD/JPY is challenging daily highs at 106.10 on Kuroda’s commentary as it hovers at the top leaving room for further gains.

USD/JPY has the best day of the week amid rising US yields. The pair rallied to 106.10, hitting a weekly high, and then pulled back to the 105.90 area. DXY reversed in positive territory and climbed to 90.40 and now stands at 90.25.

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Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.