Yen Retreats on Kuroda’s Comments

Market Trends - 11/04/2016

Following last week's strong rally, today’s Japanese yen was seen trading weaker - giving some respite to BoJ officials worried over rippling effects to trade from the currency’s ascension. This morning, the Bank of Japan's Governor Haruhiko Kuroda said that the central bank would prefer to wait and watch for the markets to unfold within an increasingly risk averse market environment. Kuroda said that the BoJ is ready to take "necessary steps" to reach their mandated inflation target of 2.00%. Keeping in-line with his comments from last week, the Governor commented that the BoJ will not hesitate to take additional steps if necessary to achieve the target. The BoJ's QQE stimulus program currently stands at 80 trillion yen and has been operational for the past three years.

Last week, the yen surged across the board as investors turned increasingly bullish, sending USDJPY to a 17-month low. The pair opened today at a new 17-month low - briefly trading at 107.79 before pushing higher on Kuroda's comments. The sharp appreciation in the yen's exchange rate gave rise to speculation that the BoJ could expand QQE program by another 10 - 15 trillion yen as early as April 27th, when the central bank meets for its monthly monetary policy meeting. The event would come after Japan’s early-year move to pull rates into negative territory, at -0.10%.


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