The possibility of the Bank of Japan undertaking aggressive open ended asset purchases at the upcoming meeting scheduled for next Monday and Tuesday, caused the yen to fall further against the dollar on Friday. Various Japanese politicians' comments, aimed at weakening the yen, also boosted the currency's sell-off overnight.

Having pushed higher overnight to confirm the desired 90 target, spot climbed to poke its head about the psychological 90 level twice, making a high at 90.20 before selling off into the European session. Spot has made a morning low at 89.68 but is currently trading at 89.88. Hourly RSI is at 59 and moving with a touch of downward momentum.

Japan vice economic minister sees Yen as corrective after excessive appreciation

The second in command at the helm of the ministry of economics in Japan is crossing the wires, saying he sees no problem in current Yen moves, which are "correction of excessive Yen strength", repeating Amari's remarks.

He also said the government and the BoJ "have largely agreed on joint statement", due to be announced next Tuesday, and expected to mention the 2% inflation target. The vice econ minister adds that there is no decision on the length to meet the 2% inflation goal. He faled to provide clarity on the whether or not the BOJ will also set an employment mandate. Regarding the loose policies from the BoJ, he supports more radical monetary easing.

Talk on BoJ open ended asset purchases, buoyant for Yen too

While old news, helping underpin all Yen crosses sell-off are, other than the ‘clarification’ of headlines from Economy Minister Amari, local reports suggesting that ahead of the two-day BoJ meeting (next Monday and Tuesday), the central bank may be weighing up the possibility of aggressive open ended asset purchase, a strategy towards supporting the 2% inflation target.

Japan's Amari triggers Yen selling hysteria

As a reminder, the main catalyst causing the eye-popping rebound on all JPY crosses, came from Japan's economic minister Amari, in the last 24h retracting himself from what he calls misinterpreted comments when he was quoted by media reports on Jan 15 as saying that "yen that's too weak would inflate import prices and affect people's lives."

Ever since the headline came out, as traders got worried on the change of tone, a strong Yen appreciation from USD 89.60 to USD 87.80 took place. The impulsive correction caught many longs off guard, while the thought of an end to the Yen cross rally surely crossed the minds on many others, a story we have seen repeating itself over and over in the past.

However, it has taken only 48h for Mr. Amari to restore normalcy on the Yen bear market, after rephrasing his current view on the currency as "still in the process of correcting from its sharp appreciation", Akira Amari told The Wall Street Journal on Jan17. "That was the case back then, and is the case now" he added, possibly concerned that the story of a falling Yen may have had its days numbered. Mr. Amari said words were out of context. "Some media distorted part of my comments. It is truly regrettable."