Today, Tokyo CPI data was announced. The main index rise % by 2.4 year on year basis, fell from the last data by %2.5. Expectations were to be unchanged. CPI ex Food remains unchanged at %1.9. The data support the reasons that the BOJ’s extra loose monetary policy.
BOJ had decided to buy unlimited amounts of bonds at %0.25. Since then USDJPY rose to over 130s from around 115. After a couple of bond buying, the markets stop testing the 0.25 actively but remain close to it. After today’s data, the 10-year bond rate fell.
In the meantime, USDJPY is getting a correction, maybe with a flag formation. The down moves may continue to the 125-126 zone which was a major resistance before the breakout.
But the overall outlook is still to the upside for USDJPY. If a breakout occurs from the flag formation the previous top might be tested again for further up moves. And if the markets start to test the %0.25 again, this will be a major boost for USDJPY because of the “unlimited” bond-buying by BOJ.
