The Japanese Yen eased away from earlier lows, pushed there by skeptical investors who are dubious that the latest measures from the Bank of Japan will be sufficient to generate inflation toward the BOJ’s inflation target, now beyond 2%. The BOJ decided to refocus its efforts on long-term interest rates rather than expanding its monetary base. The statement indicated that the BOJ will continue to buy long-term JGBs in an effort to maintain bond yields at near 0%.
As reported at 10:37 am (BST) in London, the USD/JPY was trading at 101.573, a loss of 0.14% for the Dollar; the pair’s daily range spanned from a low of 101.09 Yen to a peak of 102.70 Yen. The EUR/JPY is also lower at 113.2824 Yen, down 0.15%; the pair has ranged from a session low of 112.4900 Yen to a peak of 114.3900 Yen.
BOJ’s Inflation Goal Likely a Challenge
One currency researcher in Tokyo said that the BOJ’s efforts won’t eliminate general market skepticism of the BOJ’s ability to hit the original 2% inflation goal, much less the BOJ’s attempted overshoot of it. He believes that nothing in today’s BOJ announcement is sufficient to alter sentiment in favor of Yen bears. At the same time as FX traders are pushing the Yen higher, they’re also wary of the US Dollar given the upcoming policy meeting of the Federal Reserve Bank. Though the Fed is expected not to alter current policy, a hint at the timing of the next rate hike could provide some support for the greenback.