Yen Looks Past BOJ Rate Decision, Falls as US Bond Yields Rise

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Talking Points:

• Bank of Japan Keeps Annual Monetary Base Growth Rate at 80T as Expected
• Japanese Yen Looks Past Status Quo Rate Decision, Drops as US Yields Rise
• FollowEconomic Releases Directly on Your Charts with the DailyFX News App

The Bank of Japan maintained the annual pace of increase in the monetary base unchanged at ¥80 trillion, meeting economists’ expectations. Officials voted 8-1 to keep the current policy setting in place after a surprise increase in stimulus last month. The central bank said it sees inflation expectations as rising in the long term but will continue to provide stimulus until a stable 2 percent rate of price growth is maintained, adjusting policy as appropriate.

The Japanese Yen appeared to look past the status quo announcement as prices tumbled to a new seven-year low against the US Dollar. The decline did not appear BOJ-related in as much as the announcement probably didn’t significantly alter investors’ views on future policy. The move did track an overnight advance in US Treasury bond yields however, hinting at pre-positioning ahead of the FOMC minutes release due later in the day as a possible catalyst. US Dollar demand may have also found support after data from the US Treasury showed foreigners’ demand for US securities hit a record high in September. On the technical front, Currency Strategist Ilya Spivak sees near-term USDJPY resistance at 117.82.

USD/JPY 5min Chart - Created Using FXCM Marketscope