BoJ sticking to the script - won't change for a long time
As is commonplace in the market these days, BoJ announcements offer little to get excited over and this week's meeting was no different. As expected, the BoJ maintained its interest rate at -10bps as well as its target yield on 10yr JGBs (Japanese bonds) at zero percent, while at the same time continuing with its powerful easing measures which involve ongoing asset purchases.
They still maintain that policy will eventually achieve an inflation rate of 2.0%, but that this is unlikely to be realised for some time. As such, the earliest they will consider firming up rates is Spring next year.
Once again, the JPY is showing no reaction to the announcement, and we will only see a material move if and when the BoJ decides to rein in their asset purchases, though they will have to manage the communication carefully as this will set off a strong rally in the JPY if and when they do.
Last night, we saw USD/JPY pushing through the 112.00-25 zone, though gains failed to hold in what was a North American session keen on pushing the USD higher across the board.
Stock market performance and/or the US data is now the next catalyst for any major price action here, which has been frustratingly tight as we continue to pivot around 111.85-90.