The Yen skyrocketed. Overview for 20.12.2018

USDJPY is trading under pressure on Thursday; investors are analyzing decisions from the US Federal Reserve and the Bank of Japan. 

The Japanese Yen is getting significantly stronger against the USD on Thursday morning. The current quote for the instrument is 112.05.

This year’s last meeting of the Bank of Japan was over today and the regulator decided to keep the key rate unchanged at -0.10%. However, no one expected it to change, because it’s quite obvious that the time to revise the monetary policy in Japan hasn’t come yet. Remember that the BoJ has had the negative rate value since early 2016. 

Policymakers also kept the target for the 10-year government bond yield at around zero percent and the QE program volume at ¥80T per year. The Bank of Japan intends to continue supporting the country’s economy and boost the inflation towards 2%. It means that the rate will be kept negative as long as it takes to reach the target. 

As a result, the monetary base will also continue expanding. 

The statistics published in the morning showed that the All Industry Activity Index added 1,9% m/m in October after losing 1.0% the month before and against the expected reading of +2.0% m/m. This growth supported the Yen. 

Another thing that supports the Japanese currency is investors’ demand for “safe haven” assets, which increased significantly after decisions made by the US Federal Reserve during its last meeting in 2018.