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Analysts at TD Securities note that the BoJ dashed speculation that a potential exit to yield curve control (YCC) was in the offing.

Key Quotes

“Instead, the Bank made several changes today that introduced more flexibility around its current policy operations. Namely, the BoJ introduced forward guidance, more flexibility on conducting YCC but keeping 10yr yields around 0%, and expanded its ETF purchase program towards the Topix, with two dissents for stronger measures.”

“Kuroda made clear in the press conference that these changes were to increase the sustainability of easing measures and improve market functioning given they saw the need to continue their easing policy longer and would maintain that policy until their price target is met.”

“Global rates bull flattened on relief of the BOJ’s commitment to YCC.”

“Today’s BoJ decision seems mostly aimed at fixed income markets with only moderate read-across to FX. That said, the broadly dovish overtones should help keep USDJPY elevated for now.”

“On a short-term basis, we think this reinforces the recent range between 110.50 and 113. We do not see a major directional push from today’s event as investor attention shifts to a heavy data and event calendar that remains for this week.”