USDJPY Driven by BOJ Operations
USDJPY is on watch today after the BOJ announced its second unplanned set of JGB purchases this week. The BOJ offered to purchase 300 billion JPY worth of 5-10yr bonds after yields rose to 9-year highs yesterday. This comes on the back of an initial 300 billion JPY worth of purchases made on Monday as the BOJ sought to calm rising yields.
BOJ Policy Shift Coming?
On the back of the BOJ further widening the scope of its YCC target band from 0.5% to 1%, traders have been pushing yields higher, essentially playing a game of chicken with the BOJ. Many saw the tweak as laying the groundwork for a forthcoming shift in BOJ policy. However, the bank has so far ruled out any imminent shift in monetary policy and is fighting to keep the move higher in yields gradual. While yields continue to spike, the BOJ will be forced to continue with unplanned purchases, keeping volatility risks alive near-term.
USD Well Bid
The US Dollar remains strong this week as a decline in risk appetite fuels safe-haven demand for the greenback. While this remains the backdrop, the focus remains bullish for USDJPY with the pair likely to find fresh demand on dips.
Technical Views
USDJPY
The rally off the 138.03 level has seen the market breaking back above the 142.21 level. Price is currently stalled here though, with momentum studies bullish, the focus remains on further upside near-term and a break above the 145 level and a continuation of the bull trend higher. Notably, the Signal Centre has an active buy signal in USDJPY today set above market at 141.790 targeting a run up to 145.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.