Japanese Yen Retreats on BoJ Easing

By: Barbara Zigah

The Japanese Yen slipped broadly lower earlier as the Bank of Japan increased their asset purchase program by 10 trillion Yen, slightly more than experts had expected. The bank also bolstered its easing arsenal by expanding bond purchase target maturities to three years and increased purchases of stock ETFs. In general, markets were not disappointed with the bank’s actions though some said it wasn’t a “bazooka” which would push the greenback past the 11-month high of 84.187 Yen that was struck last month. As reported at 12:14 p.m. (JST) in Tokyo, on the announcement, the USD/JPY pair rose to 81.45 Yen, a gain of more than 45 pips; analysts expect that last week’s peak of 81.78 Yen could be the next possible target.

The Euro also slipped briefly against the U.S. Dollar in Asian trade, falling to $1.3176 from $1.3240 struck overnight in New York. Standard & Poor’s ratings agency lowered its rating on Spain from A to BBB- with a negative outlook including a warning that S&P analysts expect the Spanish deficit to continue to deteriorate more than thought previously. The timing of the downgrade, ahead of a Spanish sovereign debt auction today, couldn’t be worse and analysts expect that yields will rise once again to more than 6%.