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USD/JPY Breaks Through 110.00 As BOJ Targets Expansion Of Monetary Base

USD/JPY Breaks Through 110.00 As BOJ Targets Expansion Of Monetary Base

Edward Hyon,

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The Bank of Japanreleased its 2014 Monetary Base Target report on October 31st and have announced to expand its target for the annual increase in Japanese Government Bond holdings for this year. It is set to expand the monetary base by an annualized pace of 80 trillion yen, from a prior 70 trillion.

BOJ Board members voted 5 – 4 for the expanded easing. This may have been due to a deterioration of economic data after the introduction of April 1st sales tax hike increase by Japan’s Prime Minister Shinzo Abe. Furthermore, this is on the backdrop of Japan National Consumer Price Index for the month of September that showed 3.2 percent increase year-on-year versus 3.3 percent increase in the prior month. It missed market expectations calling for a 3.3 percent increase.

Immediately after the release, the Japanese Yen plunged against the US Dollar to trade above the psychologically significant 110.00 level. USD/JPY tumbled to a six-year low as a result. The Nikkei 225, at the time of writing, advanced 5 percent, which is the highest level since 2007. Moreover, the announcement of BOJ’s further commitment to ease and achieve 2 percent inflation target was reflected in the bond market as Japan’s 10-year yield fell to 0.45 percent, lowest since April 2013.

USD/JPY 5 Minute Chart

USD/JPY Breaks Through 110.00 As BOJ Targets Expansion Of Monetary Base

Daily Chart - Created Using FXCM Marketscope 2.0, Volume Indicator Available Here

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Edward Hyon, DailyFX Research Team

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