Position update:
- Trade Entry: Bought USD/JPY at 157.85
- Stop Loss: Set at 157.17
This post is Half of all our entry and 5 mins late.
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BoJ Decides to Reduce Bond Purchases, Policy Rate Remains Unchanged
On the 14th, the Bank of Japan (BoJ) held a Monetary Policy Meeting, deciding to reduce its current bond purchases, which are around “6 trillion yen per month.” Specific reduction plans for the next 1-2 years will be determined in the July meeting. The target for short-term interest rates remains at “around 0-0.1%.”
Following the March decision to end the negative interest rate policy, the BoJ is moving towards “quantitative tightening,” further normalizing monetary policy. BoJ Governor Kazuo Ueda will hold a press conference in the afternoon to explain the decision.
The reduction is expected to put upward pressure on long-term interest rates. Consequently, there are hopes in the market that this might somewhat curb the rapid yen depreciation driven by the widening Japan-US interest rate differential.
(Source: Jiji Press)
Market Reaction: Yen Selling
The market reacted with yen selling. The decision to finalize the reduction plan in the next meeting was perceived as too slow.
Trading Strategy
Following this, the focus shifts to buying USD/JPY. Yesterday’s US PPI decline led to USD selling, but with Goldman Sachs recommending USD buying as a hedge during Trump’s presidency, USD buying momentum has resurged.
