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Stable After BoJ Day, Gov't To Tighten Curbs In 13 Prefectures

JPY

Spot USD/JPY crept higher Tuesday after the BoJ's monetary policy statement and (even more emphatically) the press conference with Gov Kuroda ruled out tweaking the current ultra-loose policy settings anytime soon. The rate extended gains on the back of an upswing in U.S. Tsy yields, which put a bid into the greenback, but then gradually pared gains amid emerging risk aversion. It charted a virtual Doji candlestick as a result.

  • BoJ Gov Kuroda poured cold water on speculation that policy normalisation could be on the horizon, as he told a press conference that policymakers are "expecting long- and short-term policy rates to remain at the current low levels, or fall even lower," as "raising rates is unthinkable." The Bank earlier kept their monetary policy settings unchanged, while altering their long-held view on the balance of risks to inflation outlook.
  • PM Kishida admitted Tuesday night that the government looks to implement quasi-emergency measures in 13 prefectures including Tokyo, as the nationwide Covid-19 case count hits record highs. The Covid-19 task force will make the formal decision today, with new measures set to take effect from Friday. The NHK reported that virus countermeasures could include early closures of bars and restaurants and restrictions on alcohol sales.
  • USD/JPY trades at Y114.63 at typing, little changed on the day. A fall through Jan 14 low/76.4% retracement of the Nov 30 - Jan 4 rally at Y113.49/43 would allow bears to set their sights on Dec 17 low of Y113.14. Conversely, a jump above Jan 11 high of Y115.68 would turn focus to Jan 4 high of Y116.35.
  • Participants look ahead to the release of Japanese trade balance (Thursday) & national CPI (Friday).

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