Proactive Investors - 7.49am: Yen moves against GBP and USD following Bank of Japan’s surprise policy tweak
The yen soared in all major currency pair following the Bank of Japan's surprising yield policy tweak.
USD/JPY hit a four-month low of 133.15 after dipping nearly 3% in this morning’s Asia trading window, GBP/JPY fell to a two-month low of 161.91, and EUR/JPY dipped over 400 pips to 141.26.
Moving on, Cable is caught evenly between the bears and the bulls, having remained unchanged at 1.1215 today while forming the second spinning top candlestick pattern on the daily chart.
GBP/USD pair is showing minimal volatility in the Christmas run-up – Source: capital.com
The pound is showing similarly low volatility against the euro, having remained essentially unchanged at 87.27p in the EUR/GBP pair, as could be expected in a sleepy week on the economic calendar in the run-up to Christmas.
After adding 0.25% in yesterday’s trading session, the EUR/USD pair has held strong at 1.057 so far today.
The Bank of Japan made some surprising comments on its yield policy following its latest interest rate decision.
While interest rates remain non-existent for the moment, continuing BoJ’s ultra-loose monetary policy in stark contrast to its global counterpart, the bank adjusted its bond yield controls to allow long-term interest rates to rise more.
10-year bond yields will be given the opportunity to rise by 0.5%, having been previously limited to 0.25%.
On the policy change, analysts at Deutsche Bank (ETR:DBKGn) said that “it’s important not to underestimate the impact this could have, because tighter BoJ policy would remove one of the last global anchors that’s helped to keep borrowing costs at low levels more broadly.”
Japanese equities went sharply south on the news, while the yen soared in all major currency pairs.
USD/JPY hit a four-month low of 133.15 after dipping nearly 3% in this morning’s Asia trading window, GBP/JPY fell to a two-month low of 161.91, and EUR/JPY dipped over 400 pips to 141.26.
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