USD/JPY edging higher

The release of a much weaker than expected print for Japan’s Q4 GDP placed today’s BoJ meeting in a different light. While there was very little expectation of any policy action by the BoJ today the Bank surprised by increasing its lending program.

While asset purchases were not increased it is unlikely to be long before the BoJ embarks further along this path too. Clearly as the GDP data shows the task to boost growth / end deflation is going to be tough especially given the upcoming consumption tax hike. In other words the potential for future action remains significant.

USD/JPY fell initially on the BoJ outcome but pushed higher after an initial disappointment. The recent widening in the US / Japan yield differential (10 year differential at 224 basis points) indicates that USD/JPY will be supported on the upside, with support around 101.38.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: