USD/JPY and yen crosses have soared after the Bank of Japan left policy unchanged at its meeting. In summary the statement:

  • left short-term interest rates at -0.1%
  • 10 year JGB yield left around 0% with not alteration to the 0.5% tolerance cap(i.e. no change to guidance allowing the 10-year bond yield to move 50 basis points either side of its 0% target)
  • as I post the yield on 10 year JGBs has plummeted 10bp to 0.395% (from above 0.5% prior to the BOJ statement)

there is more at the post linked above on the decision.

As I update USD/JPY has hit highs above 131.20. It was marked higher from around 128.60 just prior to the announcement.

Japan’s benchmark Nikkei 225 rose, as did the Topix. JGB futures jumped (lower yield). US bond yields fell also.

Earlier in the session we had weak data from Japan (January Reuters Tankan and November core machinery orders – see bullets above for more on these).

Asian equity markets:

  • Japan’s Nikkei 225 +2.2%

  • China’s Shanghai Composite -0.02%

  • Hong Kong’s Hang Seng -0.1%

  • South Korea’s KOSPI -0.7%

  • Australia’s S&P/ASX 200 +0.1%

USDJPY wrap chart 18 January 2023