Talking Points:

  • Yen pops as BOJ trims bond uptake but gains may quickly fizzle
  • Aussie Dollar back on the offensive as building approvals soar
  • Euro, Franc unlikely to see fireworks after incoming data flow

The Japanese Yen led the way higher in Asia Pacific trade, rising against all of its major currency peers after the Bank of Japan soaked up a smaller amount of local government bonds than in its previous buying operation. That spooked traders ever watchful for signs of stimulus withdrawal.

Cooler heads may yet prevail however, with the Yen reversing gains. The BOJ’s shift to targeting a specific bond yield level rather than an amount of assets to purchase means the size of uptake is subject to fluctuation. That means today’s smaller uptake need not signal any policy regime change whatsoever.

The Australian Dollar likewise pushed higher following an impressive set of building approvals data. The currency rose alongside front-end bond yields, hinting that the stellar outcome fueled speculation on a sooner RBA interest rate hike. Still, traders don’t expect to see a rise before October.

Looking ahead, another quiet day on the European data front offers little that might produce FX market fireworks. An assortment of Swiss and Eurozone releases are unlikely to mean much for near-term SNB and ECB policy trends and so seem likely command attention from the Franc and the Euro.

Need help integrating economic news into your trading strategy? Check out our guide!

Asia Session

Yen Gains May Fizzle as BOJ Stimulus Withdrawal Hopes Fade

European Session

Yen Gains May Fizzle as BOJ Stimulus Withdrawal Hopes Fade

** All times listed in GMT. See the full DailyFX economic calendar here.

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To receive Ilya's analysis directly via email, please SIGN UP HERE

Contact and follow Ilya on Twitter: @IlyaSpivak