BoJ JGB reduction "not really a signal of a pivot to the exit" - HSBC
|In its latest note released in the last US session, the Research Team at HSBC offered their thoughts on the BoJ’s JGBs reduction move and its impact on USD/JPY.
The initial catalyst for JPY strength was a BoJ announcement that it had reduced bond buying in the 10-25 year part of the curve by JPY10bn in December, and by a similar amount in bonds with a maturity of over 25 years.
The BoJ has cut its purchases before but typically for maturities under 10 years.
USD-JPY had been losing momentum anyway ahead of 113.20 at the time of the announcement. This may explain the exaggerated response to what was a rather modest trimming of bond purchases and, of itself, not really a signal of a pivot to the exit.
Reports in the Japanese press (Kyodo) that the BoJ may increase its FY18 GDP forecast may also have contributed to the move lower in USD-JPY.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.