Bank of Japan reacts to the JPY rise late on 26.01.2018
There was this one liner right at the end of Kuroda’s panel intervention where he said :
”We see some pressure on wages and the mindset in Japan is finally changing and we’re moving towards our inflation target’ .
That set the fire to the JPY gaining 1% or more versus the universe. BOJ must have been alerted and monitoring the markets in the wake of and found it
useful to issue an official disclaimer late in the Friday market. USDJPY shot up from 108.30s to 109.06 in the blink of an eye.
Is it to stem the JPY’s rise? Well that’s a guess but they also saw the reaction when they scaled back on the JGB buying a few weeks ago. They know the market is ready to buy JPY if and when they will change their Monetary Policy , Kuroda has this question probably 10 times a week. What is now very clear is that they will have to do it very very slowly and accompany any move with tons of explanation for the market not to buy to much JPY. It makes it all the more interesting on how that will happen. There may be stealth interventions needed by the MOF( MOF decides on interventions, BOJ is the executioner of the trades) if and when that time comes.
After the flurry , markets settle down again with USDJPY around 108.75 .
Funny enough it also capped EURUSD and CABLE , which were both on the rise again.