The Bank of Japan holds monetary policy steady

Marco Green
January 23, 2018

The major USA indexes set fresh record highs Monday after leaders in the Senate said they reached a deal to fund the federal government for three weeks as negotiations on a longer-term deal continue.

In the oil space, Inpex is adding 0.7 percent and Japan Petroleum Exploration is adding nearly 1 percent. He preferred a reduction in the target for 10-year yields.

The index briefly pared losses on news that USA senators struck a deal to lift a government shutdown, but retreated soon after. That prompted the yen to erase gains made earlier in the day.

"Inflation expectations are moving sideways recently", the BOJ said in a quarterly report, offering a more optimistic view than three months ago when it said they were moving on a weak note.

Still, the central bank was nowhere near its peers who were looking for ways out of unconventional monetary policies.

The USD/JPY may be rebounding because today's BOJ monetary policy statement doesn't really suggest a change in the BOJ's stance.

With the US and Europe starting to roll back stimulus, the BOJ has come under increased scrutiny as Japan's economy has expanded for seven straight quarters.

The central bank earlier this month announced it was slightly reducing its purchases of long-dated Japanese government bonds, which led to speculation that the institution would be the latest to follow in the footsteps of global central banks in tightening policy.

Even so, the BOJ's tweak to purchases was enough to embolden some investors to go long on the yen, with Singapore-based hedge fund Kit Trading Fund Ltd. predicting the currency will appreciate to 100 per dollar.

BOJ Governor Haruhiko Kuroda will hold a news conference at 3:30 p.m. (0630 GMT) to explain the policy decision.

The euro was down 0.2 percent at $1.2240 after gaining 0.3 percent overnight. The common currency was within reach of a three-year peak of US$1.2323 set on Wednesday.

The euro was supported ahead of the outcome of the European Central Bank's meeting on Thursday, which could provide clues to future shifts in the central bank's monetary policy.

The pound was steady at US$1.3983 after touching US$1.3992, its highest level since June 2016's vote for Brexit, on optimism that Britain will reach a favourable divorce deal with the European Union.

The dollar index against a basket of six major currencies stood rose 0.15 percent to 90.524 .DXY .

Crude oil prices inched higher Monday after a top Saudi official said that OPEC should extend its supply quota plan beyond this year.

United States crude oil futures rose 0.66 per cent to US$63.99 per barrel and Brent gained 0.55 per cent to US$69.40 per barrel.

Other reports by Click Lancashire

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