The Takeaway:BoJ minutes emphasize the importance of price stability -> Market awaits news on the next BoJ governor -> USD/JPY trading unchanged
USD/JPY wasunchanged as the BoJ policy minutes emphasize on price stability.
According to the BoJ policy minutes, the BoJ aims to achieve a price stability target and it is important for the public not to perceive the purchase of government securities as debt monetization. In other words, Japan’s monetary policies will focus on managing its current account by encouraging higher demand for JGBs. Furthermore, the BOJ realizes that multiplier effects were missing from the previous monetary easing polices, implying the lack of efforts from firms and household to maximize economic growth.
Against the backdrop set by the BoJ meeting minutes, forex traders will pay close attention to the impending announcement of a new BoJ governor, as the current BOJ governor will step down on March 19. Market participants have initially predicted Mr. Iwata and Mr. Mutoh as the two candidates having the most potential to succeedMr. Shirakawa as they were former BOJ deputy governors. However, Amari told reporters on February 11 thatAsian Development Bank President Haruhiko Kuroda has the qualification for the job, thereby adding uncertainties to the market. Until the release of the BOJ governor deicison, forex traders are not likely to hold a strong position in the yen without clarity on the timing of monetary easing policies.
The USD/JPY dropped 18 pips in the five minutes leading up to the announcement. At the time of writing, the currency pair is trading at 93.728.
USD/JPY 1 Minute Chart
Charted Created by Robin Leung using Marketscope 2.0