FXstreet.com (Barcelona) - The Bank of Japan fine-tuned its easing program at today's policy meeting but, crucially, stopped short of delivering any net new balance sheet expansion. The target for T-bill purchases via the bank's Asset Purchase Program (APP) was raised by JPY 5 trn, but the target for 3m and 6m loan provisions were reduced by an identical amount. USD/JPY jumped 40 pips, before giving back all gains within minutes.
According to Chris Walker, a Research Analyst at UBS, “We see no reason to change our USD/JPY forecasts on this occasion, but we do recognize that the BoJ's purchase facility has become vulnerable to mission creep, and we remain on alert for future changes that could quite easily produce a yen-negative outcome.”
The BoJ also cut its 2012/13 core CPI forecast to 0.2% YoY (from 0.3% previously), but left the forecast for the following year unchanged at 0.7% YoY. The prevailing risk aversion has fuelled the yen today against virtually all other rival currencies, principally the USD.
According to Chris Walker, a Research Analyst at UBS, “We see no reason to change our USD/JPY forecasts on this occasion, but we do recognize that the BoJ's purchase facility has become vulnerable to mission creep, and we remain on alert for future changes that could quite easily produce a yen-negative outcome.”
The BoJ also cut its 2012/13 core CPI forecast to 0.2% YoY (from 0.3% previously), but left the forecast for the following year unchanged at 0.7% YoY. The prevailing risk aversion has fuelled the yen today against virtually all other rival currencies, principally the USD.
