BoJ keeps YCC Unchanged

Good morning !!

The hard work in trading comes in the preparation. The actual process of trading, however, should be effortless.

BoJ monetary policy meeting kept the yield curve unchanged at +/- 50 bps. It is the only Central Bank that has a NIRP (Negative Interest Rate Policy). The bank will continue with its current monetary policy of maintaining its short-term interest rate at minus 0.1% and its long-term interest rate around 0%. The Bank will offer to purchase 10Y JGBs at 0.50% every business day through fixed rate purchase operations unless it is highly likely no bids will be submitted. You may revisit the earlier decision here.

Earlier local media reports suggested that policymakers will be looking to review the side effects of current ultra-easy monetary policy and potential risks following the December move. This had lead to consternation among the market participants with market opinion widely divided between status quo / widening of the band / abandonment of YCC policy. 

USD/JPY bounced off the 128.00 handle to trade at 131.00. JPY weakness rubbed off other Asians with USD/Asia tad bit higher 0.20% - 0.30%. The 10Y JGB yield however continues to trade at 0.5070%. 

USDJPY faces resistance at the 131.45, 132.70 levels and then 134.40 levels and faces support at 129.00 / 128.00 / 127.40. The trend is lower for the pair so people looking to sell into resistance, it is a good idea to wait for some kind of topping action / consolidation before initiating a trade. It just improves the risk reward of a trade.

Have a good trading day !!