Japanese Yen Moves Up As BoJ Widens Bond Yield Target Band

(RTTNews) - The Japanese yen gained ground against its major counterparts on Tuesday, as the Bank of Japan left its key interest rate unchanged and widened the band of 10-year Japanese government bond yield target to address disturbance in the bond market.

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

The bank will also continue to purchase a necessary amount of JGBs without setting an upper limit so that 10-year JGB yields will remain at around zero percent.

However, they decided to expand the range of 10-year JGB yield fluctuations to around plus and minus 0.5 percentage points from around plus and minus 0.25 percentage points.

The bank said it is willing to take additional easing measures, if needed. The bank also expects short and long-term policy interest rates to remain at their current or lower levels.

The benchmark yield on the 10-year Japanese government bond rose to 0.376 percent.

European markets are lower, tracking a sell-off in Asia, as the surprise move by the Bank of Japan to tweak its longstanding ultra-loose policy fuelled concerns about global growth prospects.

The yen dropped against its major trading partners on Monday.

The yen climbed to more than a 4-month high of 132.67 against the greenback, from a 4-day low of 137.48 seen at 8:10 pm ET. The pair was worth 136.91 when it closed deals on Monday. The yen is seen finding resistance around the 121.00 mark.

The yen appreciated to a 3-1/2-month high of 142.85 against the franc, from a 4-day low of 147.79 it logged at 10:00 pm ET. At Monday's close, the pair was valued at 147.39. The yen is likely to face resistance around the 125.00 region, if it gains again.

The yen firmed to more than a 2-month high of 160.80 against the pound, up from a 4-day low of 167.02 hit at 10:00 pm ET. The pound-yen pair had ended yesterday's trading session at 166.26. Next key resistance for the yen is likely seen around the 157.00 level.

The yen strengthened to nearly a 3-month high of 140.42 against the euro, rising from a 4-day low of 145.83 set at 10:00 pm ET. The pair had finished Monday's deals at 145.23. Should the yen strengthens further, it is likely to test resistance around the 135.5 region.

The yen was higher against the kiwi, at a 2-month high of 83.74. At yesterday's trading close, the pair was quoted at 87.11. The yen is poised to challenge resistance around the 78.00 mark. The yen jumped to more than a 7-month high of 88.01 against the aussie, after hitting a 4-day low of 92.02 at 8:20 pm ET. The aussie-yen pair was worth 91.71 at Monday's close. Further uptrend may take the yen to a resistance around the 84.00 area.

The yen rallied to nearly a 9-month high of 96.72 against the loonie, rebounding from a 4-day low of 100.76 it recorded at 10:00 pm ET. The yen was trading at 100.28 per loonie at yesterday's close. Continuation of the yen's uptrend may lead it to a resistance around the 92.00 region.

Looking ahead, Canada retail sales for October and U.S. housing starts and building permits for November are due out in the New York session.

Eurozone flash consumer sentiment index for December is set for release at 10:00 am ET.