By: DailyForex.com
The US Dollar continued its slide versus the Japanese Yen after a sentiment shift in the wake of yesterday’s move by the Bank of Japan. The BOJ moved to reduce its Japanese Government Bond (JGB) purchases; that, many believe, is the first step in the BOJ’s efforts to curtail its Quantitative Easing program. One strategist at Commerzbank says that the rising yields in the JGBs have essentially reinforced the market’s move on the Japanese Yen. Nonetheless, he believes it might be premature to predict a BOJ policy shift given the low inflation and the BOJ’s defense of their yield target on the 10-year bonds.
As reported at 11:12 am (GMT) in London, the USD/JPY was trading at 111.467 Yen, down 1.03%; the pair had earlier hit a session trough of 111.280 Yen, while the high stands at 112.785 Yen. The EUR/JPY is also lower at 133.7658 Yen, down 0.5232%.
Dollar Vulnerability an Issue
Analysts say that the relative weakness of the US Dollar underlines its vulnerability to policy shifts from other central banks in an effort to “normalize” policy. While for the greenback, markets have already priced in a pair of rate hikes, markets have only recently begun to price in the same tightening shift from the other major central banks.