The Bank of Japan, last night decided to leave their current stimulus plan unchanged, in addition to the current benchmark rate at -0.10%. The members votes 8-1 to keep the current stimulus package at ¥80 trillion. The members also voted 7-2 to keep the benchmark rate unchanged.
after the announcement the Japanese Yen gained, this would due to the stimulus remaining unchanged. It was expected to rise by ¥10 Trillion, which would have caused a drop in the Yen. The committee stated that they would remain stimulus until a strong 2% inflation has been acquired.
The lack of increase in stimulus also caused the Nikkei to fall after the news release. Usually an increase in stimulus will see equities rise as there is more currency to be invested into these equities.
The chart below shows how the USD/JPY reacted to the Bank of Japan release. As you can see it dropped on the strength of the Japanese Yen, however, due to everything remaining the same the Yen did not make a substantial move. We are expecting this pairing to be driven by the FOMC this week, like many other pairings.
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