- BOJ reduced purchases of Japanese Government Bonds (JGBs) with 5-10 years to maturity.
- JPY failed to pick up a bid in response to reduced JGB purchases by the BOJ.
- USD/JPY hit a fresh session high of 110.59.
The market seems to have come to terms with the fact that the Bank of Japan (BOJ) trims or boosts JGB purchases depending on whether there is downward pressure or upward pressure on yields and these changes are a part of routine operations.
Consequently, the JPY failed to pick up a bid after news hit the wires that the BOJ has reduced purchases of JGBs with 5-10 years to maturity by JPY 20 billion. Instead, the USD/JPY jumped to a fresh session high of 110.60 and was last seen hovering at 110.57.
The data released earlier today showed Tokyo CPI for June rose 0.7% vs 0.6% expected and higher than the previous reading of 0.5%. Meanwhile, industrial production rose 4.2 percent year-on-year in May, beating the estimated growth of 1.1 percent by a big margin. The actual reading was well above the previous month's print of 2.6 percent.
However, the upbeat Japanese data also failed to put a bid under JPY. That said, JPY bulls could make a strong comeback if US-China trade war escalates.
USD/JPY Technical Levels
Resistance: 110.90 (June 15 low), 111.40 (May 21 high), 111.62 (50% Fib R of December 2016 high - March 2018 low)
Support: 110.18 (200-day MA), 109.80 (bullish 50-day moving average), 109.37 (June 25 low).
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