As many had expected, the Bank of Japan (BOJ) earlier today intervened in the Yen’s rise following the U.S. central bank’s easing moves last week which pushed the Japanese currency into unwelcome territory. The Bank of Japan increased their asset purchases by 10 trillion Japanese Yen, twice as much as was expected. Furthermore, the BOJ said that they would increase the pace of its asset purchases next year, and extend that purchase period through December 2013.
As reported at 1:48 p.m. (JST) in Tokyo, the Japanese Yen slipped to a 1-month trough, with the USD/JPY pair trading at 79.10 Yen from 78.65 Yen ahead of the BOJ’s announcement. Analysts say the pair is now near the top of the Ichimoku cloud at 79.265 Yen, and a break of this level would send a strong buy signal for the U.S. Dollar. The action was also seen as a trigger for higher risk assets.
The Euro held close to the 4-month peak struck on Monday, trading most recently at $1.3068, as investors digested the ramifications of Spain’s reluctance to request bailout assistance. Traders said that the slight pullback was a reflection of profit taking; the EUR/USD pair has rallied nearly 9% over the past few months.