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Japanese Yen Dips As BoJ Maintains Ultra-easy Monetary Policy

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The Japanese yen lost ground against its major counterparts in the Asian session on Thursday, as the Bank of Japan maintained its massive monetary stimulus and pledged to defend the cap on its 10-year bond yields by buying Japanese government bonds in unlimited amounts.

The board, governed by Haruhiko Kuroda, decided to hold the interest rate at -0.1 percent on current accounts that financial institutions maintain at the central bank.

The bank will continue to purchase a necessary amount of Japanese government bonds without setting an upper limit so that 10-year JGB yields will remain at around zero percent.

The bank will offer to purchase 10-year JGBs at 0.25 percent every business day through fixed-rate purchase operations.

The BoJ reiterated that its short- and long-term policy interest rates would remain at their present or lower levels.

Data from the Ministry of Economy, Trade and Industry showed that Japan industrial production rose a seasonally adjusted 0.3 percent on month in March.

That was shy of expectations for an increase of 0.5 percent and down from 2.0 percent in February.

Data from the Ministry of Economy, Trade and Industry showed that Japan retail sales rose a seasonally adjusted 2.0 percent on month in March – coming in at 13.628 trillion yen.

That beat forecasts for an increase of 1 percent following the downwardly revised 0.9 percent decline in February.

The yen weakened against its major peers on Wednesday.

The yen depreciated to 130.27 against the greenback, its weakest level since April 2002. The pair was worth 128.42 when it closed deals on Wednesday. The yen may challenge support around the 132.00 mark.

The yen slipped to a 2-day low of 136.97 against the euro, down from Wednesday’s close of 135.59. The yen is likely to face support around the 138.00 region, if it falls again.

The yen was down against the pound, at a 2-day low of 163.01. The pound-yen pair had ended yesterday’s trading session at 161.02. Immediate support for the yen is possibly seen around the 165.00 level.

Against the franc, it weakened to a 3-day low of 134.21 from yesterday’s close of 132.51. Further drop in the currency may face support around the 136.00 level.

The yen touched 2-day lows of 92.59 against the aussie and 84.66 against the kiwi, compared to Wednesday’s closing values of 91.47 and 83.98, respectively. The yen is seen finding support around 94.00 against the aussie and 87.00 against the kiwi.

The yen was lower at a 6-day low of 101.52 against the loonie. The yen was trading at 100.15 per loonie at yesterday’s close. Should the yen falls further, it may test support around the 103.00 region.

Looking ahead, Eurozone economic sentiment index for April is due in the European session.

At 8:00 am ET, German preliminary CPI for April is scheduled for release.

U.S. advance GDP data for the first quarter and weekly jobless claims for the week ended April 23 will be featured in the New York session.

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