Mixed messages going into the BOJ policy meeting tomorrow

USD/JPY has pared gains on the report in a fall from 109.07 to 108.63 before finding a bounce to 108.90 currently - keeping just above its 200-hour moving average.

The catalyst is the BOJ report here, suggesting that the central bank is going to widen its 10-year JGB yields target band from 0.20% to 0.25%.

In turn, we're seeing 10-year JGB yields jump up before the spike is seen abating a little in the past hour with the Nikkei also returning from the lunch break and halving its 1.9% gains earlier to just 0.9% at the moment.


The BOJ had said they are nowhere near allowing for policy to tighten or even looking at that but allowing for added flexibility in yields is not quite hinting at that same message, though this isn't entirely unexpected based on previous reports.

Either way, with the BOJ still owning more than two-thirds of JGBs in the market, this is merely semantics more than a vigorous change in policy mindset by the central bank.