Bank of Japan meeting: watching QE commitment

In the Covid-19 shortened meeting on Monday, the BoJ is expected to keep rates unchanged. The focus will however be the positioning of their stance with further bond purchases and the update of their economic outlook.

While central banks around the world lowered rates into March as the Covid-19 implications struck the globe, the BoJ with their limited room had maintained the negative interest rate policy at -0.1% for short-term rates amid their its curve control (YCC) policy. This may well remain the case as Japanese lenders and borrowers alike find little further incentives to increase risk taking with any deeper cut in interest rates.

That said, the profound and protracted hit to the Japanese economy with Covid-19 as Japan extended its nationwide state of emergency in April and looks to further extend it this week continues to invite the BoJ to commit to further quantitative easing. With news from Nikkei Asian Review suggesting potential unlimited government bond buying from the current 80 trillion-yen cap, the BoJ may signal to the market Fed-style the unconditional support here. Given that the on-going JGB purchases fall well below the level, there are little expectations for the upcoming announcements to be market moving at present.

Meanwhile, the outlook report will also be in focus with the dated January update having previously reflected a median forecast of moderate 2020 growth at 0.9% year-on-year. This figure is long due for a revision, but the extent of the decline may well remain a rough gauge amid the on-going uncertainties.

USD/JPY externally influenced

USD/JPY can be seen trading rangebound around 107.50 levels into the fresh week and making no clear deviations from the triangle pattern. Risks are nevertheless tilted to the downside watching other leads including the expectations for risk aversion interest to sustain as we dive deeper into the US earnings season, while month-end US dollar selling may also be noted this week after seeing the surge in US market in April.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.