Why the market does not believe the Bank of Japan
The BoJ took a complicated stance at their last meeting. Find out why their messaging moved markets and the effect it had on USD/JPY.
Bank of Japan Messaging
Last week, the Bank of Japan elected to hold interest rates steady. They also surprised by announcing a tweak to monetary policy that could allow more interest rate flexibility in the future. Instead of raising short term interest rates, the BoJ made a more intricate adjustment - raising the ceiling on 10 year interest rates by 0.5%. Markets initially reacted in favor of the yen, before turning against JPY pairs over the weekend and into this week.
Effect on USD/JPY
The recent interest rate decisions for both countries helped conclude a turbulent July for the dollar-yen pair. Surging into August, USD/JPY finishes July close to where it started the month - near 144.00. Throughout the month, the pair fell over 700 pips and now trades above 143.00. Such price extremes allow traders to either join the rally through new highs or take a contrarian stance towards mean reversion.
USD/JPY historical prices
How to trade Japanese yen
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on JPY pairs
Trading forex requires an account with a forex provider like IG. JPY pairs can be found in IG's platform underboth the 'Major' and 'Minor' pairs tab. Many traders also watch major forex pairs like GBP/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like IG’s Trading Academy. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.
This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. See our Summary Conflicts Policy, available on our website.
Live prices on the most popular forex markets
See more forex live prices
Prices above are subject to our website terms and agreements. Prices are indicative only
