Yujiro Goto, Research Analyst at Nomura, explains that the BOJ has reduced the amount of its 3-5yr JGB purchases slightly from the previous purchase operation as the Bank bought JPY380bn of 3-5yr JGBs, while it purchased JPY400bn previously.

Key Quotes

“The BOJ is scheduled to announce its JGB purchase schedule for April on Friday, but it reduced the amount before the announcement of the schedule. The JGB market’s reaction was limited, as was the FY market’s reaction. Expectations for rate hikes by major central banks have receded recently, which likely made it easier for the BOJ to reduce the size of the purchase without much JGB volatility.” 

BOJ Governor Kuroda re-emphasised the strength of the yield curve control framework at his speech last Friday and the Bank is likely to continue to adjust the amount of JGB purchases flexibly to achieve the desired curve. Governor Kuroda said “yield curve control is designed to enable the Bank to conduct monetary policy in a more flexible manner, depending on the situation, compared to the previous frameworks in which the amount of JGB purchases was fixed.” Then, he said the impact of a unit amount of JGB purchases could be significant if JGBs to be purchased become scarce. These comments re-emphasise the departure from quantity commitments towards a lower yield curve. The BOJ is likely to keep gradually reducing its JGB purchases, while a temporary rise in the purchase amount is possible to stem volatility as in February.”

As the Bank is expected to reduce its JGB purchases gradually, the calm market reaction today was likely encouraging for the Bank. Volatility in the Japanese financial market has been low, which may encourage foreign bond investment by insurance companies as the new fiscal year starts next week. While market expectations for rate hikes by the Fed have declined recently to the level at end-February, two more rate hikes by the Fed in 2017 are still the most likely scenario, while the ECB’s policy normalisation is likely approaching. We expect the BOJ’s dovish stance, which is evident in lower yields not the quantity of JGB purchases, to remain as JPY negative.”

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD steadies near 1.0550, looks to post modest weekly gains

EUR/USD steadies near 1.0550, looks to post modest weekly gains

EUR/USD has lost its bullish momentum after having climbed above 1.0570 with the initial reaction to the US data in the American session and retreated toward the mid-1.0500s. On a weekly basis, the pair remains on track to close in positive territory. 

EUR/USD News

GBP/USD struggles to hold above 1.2300

GBP/USD struggles to hold above 1.2300

GBP/USD has edged lower following a jump above 1.2300 in the early American session on Friday. The market mood remains upbeat ahead of the weekend with Wall Street's main indexes posting strong daily gains on upbeat US data. 

GBP/USD News

Gold stays below $1,830 as US yields edge higher

Gold stays below $1,830 as US yields edge higher

Gold continues to fluctuate below $1,830 on Friday and looks to close the second straight week in negative territory. Fueled by the risk-positive market environment, the benchmark 10-year US Treasury bond yield is up more than 1% on the day, limiting XAU/USD's upside.

Gold News

Why Cardano could surprise over the weekend

Why Cardano could surprise over the weekend

ADA  set to close out the week with a gain on the workday trading week and over the weekend? Central banks signaled that the rate hike cycle is ending, meaning less stress and tight conditions for trading, opening up room for some upside potential with Cardano set to pop above $0.55 and test a significant cap.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Forex MAJORS

Cryptocurrencies

Signatures