BoJ keeps rates unchanged; USD/JPY shaken but prices prevail
InvestingOnline.com
31/07/2018, 06:12The Bank of Japan announced they would maintain its interest rate unchanged at -0.1% for at least one more month. The decision came in line with expectations.
BoJ is also maintaining their 1’year bond yield target to zero as the bank will buy Japanese’s government bonds. “While doing so, the yields may move upward and downward to some extent mainly depending on developments in economic activity and prices,” the official statement says.
“With regard to the amount of JGBs to be purchased, the Bank will conduct purchases in a flexible manner so that their amount outstanding will increase at an annual pace of about 80 trillion yen.”
BoJ will buy JGB in a flexible manner an amount that will increase at an annual pace of around 80 trillion yen. The bank confirmed that it would maintain very low rate levels for extended period of time.
USD/JPY positive after BoJ announcement
USDJPY daily chart July 31
The Dollar is trading positive against the Japanese Yen on Tuesday following BoJ rate decision and Chinese weaker than expected manufacturing PMI.
USD/JPY is trading 0.20% positive on the day at 111.25. The cross fell to intra-day lows at 110.74 after the BoJ decision; however, it bounced hard to trade as high as 111.45 as the 200-day moving average acted as resistance.
Eamonn Sheridan, Forex Live analyst, said in a recent article that “the yen weakened a touch on the announcement. From just under 111.00 to circa 111.40. The press conference from Governor Kuroda is at 0630GMT. There will be plenty of questions! One which springs to mind is what sort of flexibility will be allowed in 10-year yields. Moreover, there will be plenty more.”
Technical conditions for the USD/JPY are bearish; however, the pair is turning to a favorable technical situation.
As for the upside, the pair needs a now significant resistance at 111.40. Above there, investors should focus on the 112.20 and then the 113.15.
To the downside, the pair should break the dynamic support at 110.75 and then break moving averages at 110.60, the 50-day MA, and the 200-day moving average at 110.05.
