Forex moves reflect various factors

reuters reported that the Bank of Japan Governor Haruhiko Kuroda said on Tuesday the central bank’s offer to buy an unlimited amount of government bonds reflected its view the recent rise in the country’s long-term interest rates was driven by factors unrelated to its economy.

“We don’t expect to conduct such operation frequently. We’ll do this as needed,” Kuroda told parliament, referring to the BOJ’s market operation on Monday aimed at capping the 10-year Japanese government bond (JGB) yield at its implicit 0.25% ceiling.

Kuroda said that Japan’s economy, price condition warrants keeping monetary policy loose.

Key comments

Will explain to G20 counterparts japan’s economic situation, seek understanding over japan’s monetary policy management.

BoJ’s market operation yesterday has had intended effect, pushed down 10-year JGB yield to 0.22% from near 0.25%.

Global economy at critical stage with grave situation in Ukraine leading to rise in oil prices.

BoJ’s offer to buy unlimited amount of JGBs to defend its rate target is ‘poweful’ means, not something taken by other central banks.

 BoJ’s market operation yesterday reflected its view recent rise in JGB yields were driven by factors unrelated to japan’s economy, such as rising overseas interest rates.

We don’t intended to conduct unlimited bond buy offers too frequently, will do this as needed.

Our current monetary framework seeks to balance need to support economy while mitigating negative impact on banks, JGB market functions.

Forex moves reflect various factors, not driven just by interest rate differentials between each country.

Our baseline forecast is for Japan’s economy, prices to gradually pick up as rising real household income underpin consumption,

One notable source of concern is escalating tension regarding Ukraine which could hurt global, Japanese economies if it drives up oil, commodity costs,

BoJ must debate exit strategy when inflation approaches 2%, doing so before that would risk mislead markets.

What fed is doing now would offer clues for when BoJ debates specifics of exit strategy.

USD/JPY traders await Russia headlines

There have been no impact other yen this far that is otherwise being driven y offshore influences in geopolitics. The probabilities of an imminent attack on Ukraine by Russia were perceived higher on Monday after President Volodymyr Zelenskiy urged Ukrainians to fly the country’s flags from buildings and sing the national anthem in unison on Feb. 16, a date some Western media have cited as the possible start of a Russian invasion. The yen picked up a bid on the sentiment. USD/JPY is holding below 115.50.