Dollar gains on yen after BOJ's special JGB buying, US jobs data awaited

Dollar gains on yen after BOJ's special JGB buying, US jobs data awaited

3 February 2017, 09:32
Josephine Kreus
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TOKYO (Reuters) - The recently beleaguered dollar rose to its session high against the yen on Friday after the Bank of Japan offered to buy Japanese government bonds in a surprise operation aimed at bringing down JGB yields, as investors awaited U.S. jobs data later in the session.

The dollar was up 0.2 percent at 113.04 yen after rising as high as 113.24 earlier. It had slumped to 112.05 yen overnight, its lowest since late November, and was still on track to fall 1.8 percent for the week.

The BOJ offered to buy benchmark 10-year Japanese government bonds in a special operation on Friday, aimed at keeping the 10-year yield at its target of around zero percent.

"The yen might continue to weaken against the dollar after today's action," said Masashi Murata, senior currency strategist at Brown Brothers Harriman.

"Some participants may have concerns about the BOJ's previous actions, or lack of action, when JGB yields have risen, so it's a good signal," he said. "But my feeling is that BOJ also doesn't want to keep expanding their balance sheet."

The BOJ held policy steady on Tuesday at the conclusion of its two-day meeting, maintaining its pledge to guide short-term interest rates around minus 0.1 percent and the 10-year JGB yield to around zero.

The perceived safe-haven yen had risen to a session high of 112.505 yen against the dollar in late morning Tokyo time, after regional stock markets dropped after China unexpectedly raised short-term interest rates. [Read more.. http://snip.ly/mdsl3 ]
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