Japanese yen calm after BoJ meeting

The Japanese yen is showing little movement on Friday. In the European session, USD/JPY is trading at 113.44, down 0.13% on the day.

It was a dramatic week, with central banks in the spotlight. There were significant announcements on both sides of the pond. The Federal Reserve announced that it would double the pace of its tapering and released a forecast showing up to three rate hikes in 2022. The Bank of England meeting was even more dramatic, as the BoE shocked the markets when it raised rates. Although the hike was only 15 bps, the move is significant in that it marks the first rate hike by a major central bank during the corona pandemic.

BOJ maintains accommodative policy

Over in Japan, the BoJ meeting was a tame affair, which is usually the case with the BoJ. The central bank maintained policy rates as well as the 10-year JGB yield target of 0.0%. At the same time, the bank said it would scale back its emergency pandemic programme in 2022. The BoJ signalled that it is maintaining its ultra-accommodative policy, with BoJ Governor Kuroda stressing that the cutting back of the emergency funding would not be followed by the withdrawal of QE. The cautious stance of the BoJ is more in line with the ECB, which announced that it would wind up its emergency pandemic programme while temporarily increasing QE through its Asset Purchase Programme (APP).

The Japanese yen had a muted reaction to the policy meeting. This should not come as a surprise, given that the key factor driving the yen has been the US/Japan yield differential rather than any policy decisions by the central bank.

.

USD/JPY Technical

  • USD/JPY faces resistance at 113.95. The next resistance line is 114.50
  • 113.35 is under pressure in support. Below, there is support at 112.84

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

Latest posts by Kenny Fisher (see all)