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Yen Gets Hammered As BoJ Unveils Unlimited Bond Buying Plan

FOREX

The yen tumbled as the Bank of Japan announced its plan to conduct unlimited fixed-rate bond purchase operations every business day "until it is highly likely that no bids will be submitted". The Board stuck to its existing ultra-loose policy settings, despite an upgrade to its inflation outlook, with price growth expected to slow in 2023. The decision to strengthen YCC enforcement signalled that policymakers prioritise working towards their inflation target over rapid yen weakening.

  • The yen showed some weakness even before the BoJ announcement. It went offered into the final Tokyo fix of the month, with Japan set to observe Golden Week holidays starting tomorrow.
  • USD/JPY cleared resistance from Apr 20 high/0.764 proj of the Feb 24 - Mar 28 - 31 price swing at Y129.40/44 and topped out just a handful of pips shy of the psychologically important Y130.00 figure. Renewed buying activity allowed the pair to print its best levels in two decades.
  • The greenback received a boost on the back of post-BoJ cross flows and easily outperformed its G10 peers. The U.S. dollar index (DXY) rallied to new cycle highs.
  • Reminder that the Riksbank is also due to announce its closely watched monetary policy decision today. The Swedish krona went offered ahead of the announcement, only the yen fared worse.
  • Today's data highlights include advance U.S. GDP & weekly jobless claims as well as flash German CPI. Comments are due from ECB's Wunsch & de Guindos as well as Norges Bank Gov Bache.
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