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Japanese Yen Falls Sharply As BoJ Maintains Rate, Yield Curve Control Policy

japanyen sep19 18jan23 lt

The Japanese yen lost ground against its major counterparts in the Asian session on Wednesday, as the Bank of Japan kept its interest rates and yield curve control policy unchanged, defying expectations for a tweak in monetary policy framework.

The Policy Board of the BoJ unanimously decided to maintain a negative interest rate of -0.1 percent on current accounts that financial institutions maintain at the central bank.

The bank will also continue to purchase a necessary amount of JGBs without setting an upper limit so that 10-year JGB yields will remain at around zero percent.

After unexpectedly expanding the tolerance band of 10-year JGB yields in December, the bank today maintained the stance that it will allow yields to fluctuate in the range of plus and minus 0.5 percentage points from the target level.

Data from the Cabinet Office showed that Japan core machine orders tumbled a seasonally adjusted 8.3 percent on month in November - coming in at 838.8 billion yen.

That was well shy of forecasts for a decline of 09 percent following the 5.4 percent increase in October.

The yen weakened to a 6-day low of 131.57 against the greenback from Tuesday's close of 128.05. The yen is seen finding support around the 134.00 mark.

The yen was down against the euro, at a 6-day low of 141.68. The pair had finished Tuesday's deals at 138.18. Next key support for the yen is likely seen around the 144.00 level.

The yen touched 161.45 against the pound, its lowest level since December 29. The pound-yen pair had ended yesterday's trading session at 157.33. The yen is likely to face support around the 166.00 region, if it falls again.

The yen declined to a 1-week low of 142.45 against the franc from yesterday's closing value of 138.84. The yen may challenge support around the 144.00 mark.

The yen dropped to near a 3-week low of 84.79 against the kiwi, down from yesterday's close of 82.39. Should the yen falls further, it is likely to test support around the 86.00 region.

The yen dipped to 91.91 against the aussie for the first time since December 20. The aussie-yen pair was worth 89.49 at Tuesday's close. Further downtrend may take the yen to a support around the 93.00 area.

The yen was lower against the loonie, at a 6-day low of 98.21. The yen was trading at 95.63 per loonie at yesterday's close. Continuation of the yen's downtrend may lead it to a support around the 100.00 region.

Looking ahead, Eurozone CPI for December is scheduled for release in the European session.

Canada industrial product and raw materials price indexes for December and U.S. PPI, retail sales and industrial production, all for the same month, as well as business inventories for November and NAHB housing market index for January will be released in the New York session.

The Fed Beige book report will be released at 2 pm ET.

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