- Bank of Japan lifts bond-buying limit, leaves policy rate unchanged.
- US Dollar Index steadies above 100, stays in negative territory.
- 10-year US Treasury bond yield gains more than 7% on Monday.
The USD/JPY pair started the week under modest selling pressure and dropped to its lowest level in more than ten days at 107.00. However, with the market sentiment remaining positive in the second half of the day, the JPY struggled to preserve its strength and the pair staged a rebound. As of writing, the pair was down 0.23% on a daily basis at 107.25.
BoJ expands loan programme to support economy
Following its April monetary policy meeting, the Bank of Japan (BoJ) decided to keep its policy rate unchanged at -0.1% as expected. The BoJ also pledged to buy an unlimited amount of government bonds and said that it will purchase up to 20 trillion JPY of corporate bonds. Nevertheless, the market reaction to the BoJ’s announcements was relatively muted as these changes in the policy were already priced in.
In the early trading hours of the American session, the 10-year US Treasury bond yield extended its rebound after Wall Street’s main indexes started the day higher and allowed the pair to erase a portion of its daily losses. At the moment, the 10-year US T-bond yield is up more than 7% on the day and the S&P 500 is gaining 1.25%.
Meanwhile, the upbeat market mood on Monday weighed on the greenback as well and made it difficult for the pair to extend its rebound. The US Dollar Index, which tracks the USD’s performance against a basket of six major currencies, remains on track to finish the day in the red a little above the 100 mark.
Technical levels to watch for