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USD/JPY sees little action after BOJ’s status rate decision, downgrade of economic assessment


  • USD/JPY trades near 103.53 versus 103.67 early Thursday. 
  • BOJ keeps key policy tools unchanged, revises 2020 growth forecasts lower.

Bank of Japan’s (BOJ) status quo rate decision and downward revision of current economic assessment struggles to elicit a reaction from yen traders, leaving USD/JPY sidelined above 103.50. 

The Japanese central bank has kept interest rates unchanged at -0.1% and retained the 10-year yield target at about 0%. However, the bank has revised the gross domestic product (GDP) target for the fiscal year 2020 to -5.6% from the previous projection of -5.5%. 

Other key points

Japan’s economy is likely to follow an improving trend. 

BOJ sees the fiscal year 2021 GDP forecast at 3.9% vs. 3.6% previously.

The bank projects a core CPI of 0.5% in the fiscal year 2021 versus 0.4% previously.

The bank will purchase the necessary amount of Japanese bonds without setting an upper limit so that 10-year JGB yields will remain at around 0%.

 The rate decision and policy statement offer no hawkish/dovish surprises. As such, USD/JPY is barely moving. 

The pair will likely drop below Wednesday’s low of 103.45 if the US treasury yields decline, putting pressure on the dollar. The 10-year yield is currently sidelined near 1.08%, having risen from 0.90% to 1.18% earlier this month. 

Investors are expecting the new US President to deliver a bigger spending package in follow-through to the recent announcement of the $1.9 trillion stimulus package. As such, most investment banks foresee a drop in the US dollar. 

Technical levels



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