Breaking: BOJ eases policy further, boosts purchases of corporate bond, commercial paper, USD/JPY drops

FXStreet Team FXStreet

At its shortened one-day virtual monetary policy meeting, the Bank of Japan (BOJ) board members decided to keep rates unchanged at -10bps while maintaining 10yr JGB yield target at 0.00%.

The BOJ eased policy further, said it will increase the purchases of a corporate bond, and commercial paper. The central bank also pledged to buy an unlimited amount of JGBs, removes pledge to buy JGBs so its holdings increase at an annual pace of around 80 trln yen.

Additional headlines

Expands loan programme to combat coronavirus.

To buy up to 20 trln yen of corporate bonds.

To relax rules for its corporate bond, commercial paper purchases.

To extend duration of corporate bonds it buys to 5 years.

Will actively buy JGBs, short-term securities to keep yield curve stably low.

To expand type of assets it accepts as collateral for its loan programme aimed at combating coronavirus.

Will include state-affiliated financial institutions as eligible entity for loan programme aimed at combating coronavirus.

Will mull new fund supply means for financial institutions.

Will increase maximum amount of commercial paper and corporate bonds it buys per single issuer to 500 bln yen, 300 bln yen, respectively.

Will apply 0.1% interest to outstanding balance of current accounts held by financial institutions at BOJ for those tapping its loan scheme.

The central bank increased the annual pace of ETF purchases to ¥12 trillion (previously ¥6 trillion) and introduced a new lending programme to smooth funding for firms at its March 16 emergency meeting.

About BOJ Interest Rate Decision

BoJ Interest Rate Decision is announced by the Bank of Japan. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the JPY. Likewise, if the BoJ has a dovish view on the Japanese economy and keeps the ongoing interest rate, or cuts the interest rate it is negative, or bearish.

FX implications

USD/JPY is testing lows near 107.40,as the yen popped up on the policy announcement.

Author

FXStreet Team

FXStreet

Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.

USD/JPY stays below 160.50 as markets assess BoJ decision

USD/JPY fluctuates in a relatively narrow range above 160.00 on Tuesday as markets assess the Bank of Japan's (BoJ) decision to raise the policy rate by 25 at the June meeting. Meanwhile, investors keep a close eye on news coming out of the Middle East, while preparing for the critical Fed meeting.

AUD/USD trades in tight channel near 0.7050 despite hawkish RBA message

AUD/USD trades modestly lower on the day at around 0.7050 on Tuesday as markets adopt a cautious stance amid a lack of details surrounding the US-Iran peace agreement. The Reserve Bank of Australia (RBA) left the door open for possible policy tightening after leaving the interest rate unchanged, as expected, at the June meeting but failed to boost the Australian Dollar.

Gold trims gains, approaches $4,300

Gold now surrenders part of its initial advance and recedes to the vicinity of the $4,350 mark per troy ounce on Tuesday. The early enthusiasm sparked by the US-Iran peace deal has faded somewhat, prompting investors to adopt a more prudent stance as they await further details of the agreement and key guidance from the Fed.

Why a hawkish RBA is no longer enough to lift the Australian Dollar

The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it.

BoJ just hiked and US-Iran deal is on the table: Why Japanese Yen is still around 160.00

The Bank of Japan lifted interest rates from 0.75% to 1.00%, its highest level in more than three decades. The landmark move aims to stabilize a sharply weakening Japanese Yen, but by looking at the immediate market reaction, it doesn’t look like it’s going to work.

Why a hawkish RBA is no longer enough to lift the Australian Dollar

The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it, focusing instead on slowing economic growth and proving that central bank messaging alone isn’t always enough to drive currencies.