BOJ could act on Friday, but it may not matter: USD/JPY : vi

BOJ could act on Friday, but it may not matter: USD/JPY


BOJ could act on Friday, but it may not matter
Joe Perry
March 16, 2021 2:08 PM
USD/JPY could see a pullback over the next few days ahead of the FOMC and BOJ meetings
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The BOJ has been providing monetary stimulus to Japan for years in the form of negative rates, ETF buying, and yield curve control (bond buying).  Since the pandemic, the extraordinary stimulus has only increased. After years and years of support, the Bank of Japan (BOJ) begins another 2-day meeting review on Wednesday.  On Friday, they will release the results of their findings.  Currently, the BOJ owns nearly $450 billion worth of Japanese ETFs. With stock markets at their highest levels since the 1990s, the BOJ must find a way to communicate to the markets that they are willing to do “something”, while not considering it tapering.  They could announce a reduction in the amount of ETFs they buy, but that may be a bit less dovish than they want to sound.  A more likely scenario, as had been mentioned by the BOJ last week, is to seek a freer yield fluctuation around the zero target on the 10-year JGB.  The current range is 20 bps in either side.  This would allow them to do “something”, without signaling too much.

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