Firms Early Doors On Reports Of Shift In BoJ Inflation Target

Yen has firmed early doors on weekend reports that the BoJ will add flexibility to its inflation goal. USD/JPY opened lower and touched a low of 135.79, but is starting to stabilize somewhat, now back around 135.90, still -0.5% on closing levels from the end of last week.

• Kyodo news agency reported on Saturday that the government is set to revise the BoJ's price target that commits it to achieving 2% inflation at the earliest possible date. The new mandate would be more flexible around the 2% goal, which could potentially be a medium or longer term target (see this link for more details).
• The matter is expected to be discussed with the new BoJ Governor in April next year, but this potential change (i.e. a less stringent inflation target) is fuelling expectations of a shift away from ultra-loose monetary policy settings next year.
• Note on the calendar we also have tomorrow's BoJ meeting, although no changes are expected in terms of policy settings.
• For USD/JPY lows from last week came in just under 134.60, while the Dec 2 low was near 133.60. On the topside, resistance is evident around the 138.00 region.