THE TAKEAWAY: BoJ expands stimulus by 11 trillion Yen -> Holds interest rate at 0.10% -> Yen rises against most major currencies
The Bank of Japan announced today that they will expand their asset purchase fund by 11 trillion Yen to 66 trillion. The additional stimulus only met the lower end of expectations for 10-20 trillion Yen of expansion, as was predicted by forex news sources. Also, the central bank left the interest rate at 0.10% and the credit loan program at 25 million Yen.
The BoJ and the government are both in agreement that monetary stimulus should be continued until deflation is ended; the central bank maintains a 1% inflation goal. The decision to expand asset purchases was unanimous. This is the second month in a row that the BoJ has added to stimulus.
Additional stimulus is usually negative for the economy’s currency, but the 10 trillion yen of additional stimulus was low when compared to expectations, and therefore sent the Yen higher against most major currencies in forex markets. USDJPY dropped from resistance by 80.00 and fell below 79.50 following the release; support could now be provided at 79.14, by the 61.8% retracement of the rally from the beginning of February.
USDJPY 15-minute: October 30, 2012
“Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.”
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.