The article originally appeared on Oil-Trading.CO at http://www.oil-trading.co/the-oil-blog/yen-continues-climbs-up-volatility-alert-7292016
BOJ’s Fresh Easing Excludes Bond Purchase Program
The yen was 1.5 percent higher at 103.73 per dollar at 7:25 a.m. in London, heading for the biggest gain since the June 24 aftermath of Britain’s vote to exit the European Union. Japanese benchmark bonds fell the most in eight years. “The BOJ decision failed to meet the market’s high expectations,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd. in Singapore. “Although Kuroda signaled that there could be more easing at the next meeting in September, overall this is a huge disappointment for markets.” Japan’s currency was as strong as 99.02 per dollar on June 24 in the immediate aftermath of the U.K.’s decision to leave the European Union, a level unseen since November 2013. It had retreated as far as 107.49 by July 21 as expectations built for monetary and fiscal stimulus in the Asian nation.
“Looks like Kuroda has had to accede to his internal MPB critics by ordering this policy effectiveness assessment,” said Cliff Tan, a currency strategist at Bank of Tokyo-Mitsubishi UFJ in Hong Kong. “It makes you wonder how effective fiscal policy is going to be if BOJ refuses to play ball.”
He said 100 is looking more realistic over time now.
Kuroda will speak to reporters from 3:30 p.m. Tokyo time.
“The focus will now turn to whether Kuroda can sustain expectations for more easing through communication at his presser,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd.