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Japanese Yen Weakens Slightly As BoJ Holds Policy, Sounds Gloomier

Japanese Yen Weakens Slightly As BoJ Holds Policy, Sounds Gloomier

David Cottle, Analyst

Japanese Yen, Bank of Japan Monetary Policy Decision, Talking Points:

  • USD/JPY stopped falling and ticked up after the Bank of Japan announced policy for March
  • There wasn’t much here to surprise however
  • The central bank still sees modest growth ahead, but frets the global picture

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The Japanese Yen weakened very slightly against the US Dollar Friday after the Bank of Japan left all its monetary policy settings on hold.

That outcome was widely expected in the markets before the fact, but the BoJ also downgraded its assessments of domestic and global prospects. Policymakers noted that Japanese output had been affected by slowdowns elsewhere, with exports showing some recent weakness. It added, however, that the economy’s modest expansion was likely to continue.

Turning to monetary policy, short-term rates remain steady at -0.1%, and the ten-year Japanese Government Bond yield target remains 0%, with massive quantitative easing still in place in the form of bond buying. Given recent data from around the world there was nothing especially surprising here.

The US Dollar had been falling against the Japanese Yen through the Asian morning as investors fretted about trade tensions between the US and both China and the European Union. That fall stalled after the BoJ announcement.

Fall Arrested. US Dollar Vs Japanese Yen, 5-Minute Chart.

Meanwhile, USD/JPY’s daily chart shows the pair very much still within the uptrend which has dominated trade for much of this year, as risk appetite has in turn held up as investors keep faith that a trade settlement between Washington and Beijing will ultimately reachable.

However, the JPY112.00 handle remains elusive for US Dollar bulls on a daily closing basis, even as they seem to be gearing up for another try at it.

Bulls In Charge. US Dollar Vs Japanese Yen, Daily Chart.

That level will need to be convincingly retaken, however, is the pair is to push on upward to the peaks of mid-December 2018 which now bar the way higher.

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--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.