USD/JPY drops below 122.00 on BOJ’s mega bond-buying program and softer DXY
|- USD/JPY has eased 2.8% from its fresh six-year high at 125.10 on BOJ’s unlimited bond-buying program.
- Risk-on impulse has faded the appeal for safe-haven assets.
- Investors have shrugged off the underperformance of Japan’s Retail Trade.
The USD/JPY has witnessed a bearish open rejection-reverse trading session on Wednesday as the asset moves higher gradually after opening around 122.80. However, the major has faced significant offers near 123.20 as investors prefer a ‘sell on rise’ approach. The pair has slipped near March 25 low at 121.18 at the press time.
A broader strength in the Japanese yen has been observed from Tuesday as the Bank of Japan (BOJ) paddles to cap the bond yields by 25 basis points. The BOJ has intended to buy Japanese Government Bonds (JGB) till Thursday to corner the yield curve from inversion. To address the mega buying of JGBs, the BOJ has announced that it will buy 600B yen in 3-5 yr JGBs and 725B yen in 5-10 yr JGBs. The BOJ is heavily buying the JGBs to continue with its ultra-loose monetary policy and to skip the signs of recession.
It is worth noting that investors have shrugged off the underperformance of Japan’s Retail Trade, which is released in early Tokyo. The yearly Retail Trade was reported at -0.8% higher than the previous figure of -1.1% but extremely lower than the market estimate of -0.3%.
Meanwhile, the US dollar index (DXY) seems losing its ground and is likely to tumble below Tuesday’s low at 98.40. Active risk-on impulse amid de-escalation in the Russia-Ukraine war has cheered investors and has helped them to ditch the defensives.
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.