Japanese Yen Advances As BoJ Tweaks Yield Curve Control Policy

(RTTNews) - The Japanese yen rallied against its major counterparts on Friday, as the Bank of Japan decided to bring greater flexibility to the yield curve control and to maintain its ultra-loose monetary policy.

The bank board, led by Governor Ueda Kazuo, decided to continue to allow the yield on 10-year Japanese government bonds, or JGBs, to fluctuate in the range of plus and minus 0.5 percentage points from the target level.

However, the central bank said it will conduct the yield curve control with greater flexibility, regarding the upper and lower bounds of the range, without setting "rigid limits".

The bank will offer to buy 10-year JGBs at 1.0 percent every business day through fixed-rate operations, unless no bids are submitted. The previous rate was 0.5 percent.

The board also decided to maintain a negative interest rate of 0.1 percent on current accounts that financial institutions maintain at the central bank.

The board voted 8-1 on the yield curve control. Meanwhile, the decision on the short-term policy rate was unanimous.

Data from the Ministry of Internal Affairs and Communications showed that consumer prices in the Tokyo region of Japan were up 3.2 percent on year in July.

That exceeded expectations for an increase of 2.8 percent and was up from 3.1 percent in June.

The currency climbed against its major rivals on Thursday, except the greenback.

The yen climbed to 1-1/2-month highs of 176.30 against the pound and 151.40 against the euro, from yesterday's closing quotes of 178.37 and 153.03, respectively. The yen is seen finding resistance around 172.5 against the pound and 147.00 against the euro.

The yen firmed to a 10-day high of 138.05 against the greenback and more than a 2-week high of 158.82 against the franc, from yesterday's closing values of 139.42 and 160.31, respectively. The yen is likely to face resistance around 134.00 against the greenback and 144.00 against the franc.

The yen appreciated to 1-1/2-month highs of 104.21 against the loonie and 84.94 against the kiwi, from Thursday's close of 105.41 and 86.23, respectively. The yen is poised to challenge resistance around 102.00 against the loonie and 83.00 against the kiwi.

The yen touched 91.78 against the aussie, its highest level in nearly two months. The pair was worth 93.51 at yesterday's close. Should the yen strengthens further, it is likely to test resistance around the 89.00 region.

Looking ahead, at 8:00 am ET, German preliminary CPI for July is scheduled for release.

Canada GDP data for May, U.S. personal income and spending data for June and University of Michigan's final consumer sentiment index for July are set for release in the New York session.