USD/JPY Tumbles as BoJ Announces Emergency Monetary Measures

Following the Bank of Japan’s (BoJ) unexpected second-in-a-day bond purchase operation, the USD/JPY pair continued to fall from the Asian session into the late North American session. The yen is trying to end a losing streak against the dollar that has lasted five days.

In an effort to limit yields, the Bank of Japan announced an unforeseen bond-buying operation for the second time in one day. The Central Bank has made a daily offer to buy 10-year debt at 0.5% and an unlimited amount of 2- and 5-year notes.

As it prepares to increase projected bond purchases by 23% in Q1 2023, the BoJ is confronting an increasing number of difficulties. Market expectations that the BoJ would raise the yield cap even further prompted the Central Bank to act, and other adjustments are anticipated as 2023 gets underway.

USD Index Remains Range-Bound

Meanwhile, the US dollar index traded in a narrow range between 103.80 and 104.60 this week and is still down for the month. The dollar is still on track to experience another losing December in keeping with its yearly pattern. As international tensions and the travel ban on Chinese nationals continue to rise, the dollar may find some support. Several nations, including India, Malaysia, Italy, and the United States, have now made announcements regarding their policies for arriving tourists from China.

Initial unemployment claims are the main data release for the day, making it a quiet day on the calendar but one that could bring some volatility to the US session.