The session began with the market focused on today’s BOJ decision after its 2-day meeting but the as-expected outcome caused barely a reaction in the FX market. Dollar-yen opened at Y104.30 and dipped to Y104.18 before Japanese stock markets opened slightly lower. Dollar-yen recovered in line with US Treasury yields and as the Nikkei also pared the early losses, with dollar-yen reaching Y104.36 initially and then trading a high of Y104.43 around midmorning. All that happened before the BOJ announcement, with the market then taking on a defensive posture heading into the decision. The BOJ’s decision to maintain the bank’s policy target and growth and inflation forecasts for the next two years was of litte surprise to the market although dollar-yen did lose a few points in the immediate aftermath. The pair traded back to Y104.18 and then extended the lows to Y103.97. The pair subsequently rebounded, thanks to rumored bids from just under Y104.00 and Y103.85/80, to last trade at Y104.29 in the early afternoon.
