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A quick look at the BOJ announcement

Posted Wednesday, September 21, 2016 by
Skerdian Meta • 2 min read

Morning guys, anyone followed the BOJ (Bank of Japan) statement release overnight and Kuroda´s conference? Looking at the forex chart this morning, it seems like the BOJ drove the Yen forex pairs through a rollercoaster. 

On Monday we posted a market update about the major economic events this week with the BOJ meeting being amongst the most important. We mentioned that the forex market was expecting the BOJ to step up the efforts in fighting low inflation and spurring economic growth, because the Japanese economy has been holding these two heavy burdens on its back for decades. 

The BOJ didn´t have any options this time. It shouldn´t let the market expectations down otherwise all hell would break loose and we would see the Yen pairs diving hard like an Olympic diver. 

Having a quick look at the forex charts we can tell that the BOJ has met the expectations to some extent. But the charts show a bit of a rollercoaster; USD/JPY had dipped for about 100 pips initially after the statement release but it later surged in the next couple of hours.

The price reversed in the next few hours and right now the price in this forex pair is where it was before the statement. Looks like the BOJ has satisfied market expectations to some extent, but the market remains sceptical on the effects the new policies will have.   

The BOJ left the interest rates unchanged at -0.10%. The expectations were for a 10% cut, so that might be the reason for the initial 100 pip dip. They also announced an increase of the QE programme which has given the market some food to chew on, but that doesn´t seem enough as the price action in Yen pairs shows.  

Will be back with this topic later today. Meanwhile, we will dig into the details of the BOJ statement and will try to extract the main points of it, to see what effect it might have on the JPY in the coming months. 


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