- USD/JPY is auctioning in a narrow range of 121.32-122.24 ahead of the bond-buying conclusion.
- The BOJ bought JGBs heavily to vanish signs of recession in case of yield inversion.
- The DXY has been dumped by investors on subdued US GDP and ADP Employment Change.
The USD/JPY pair is oscillating in a narrow range of 121.32-122.24 as a broad-based buying in the Japanese yen is likely to over after the conclusion of the unlimited bond-buying program by the Bank of Japan (BOJ). The four-day bond-buying program of the BOJ will conclude on Thursday.
To curtail the likely inversion of the yield curve, the BOJ pledges to offer bids for the Japanese Government Bonds (JGBs) to cap the yields at 25 basis points. 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 has heavily bought the JGBs to stick to its ultra-loose monetary policy and to skip the signs of recession.
Meanwhile, the US dollar index (DXY) has tumbled below 98.00 decisively and is likely to drag further amid subdued performance from the US Gross Domestic Product (GDP) numbers and US Automatic Data Processing (ADP) payrolls. The US Bureau of Economic Analysis reported GDP (Q4) growth on an annualized basis at 6.9%, slightly lower than the estimates and previous print of 7%.
While the ADP recorded Employment Change at 455k lower than the market consensus of 450k and earlier print of 486k.
Going forward, the US Nonfarm Payrolls (NFP) will remain the major driver that will keep the street busy. But before that, investors will focus on the US Initial Jobless Claims and speech from the Federal Reserve (Fed) President John C. Williams, which are due on Thursday. On the Japanese docket, monthly and yearly Industrial Production data will hold significant importance.
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