THE BANK OF JAPAN EXTENDED THE AMOUNT OF ASSET PURCHASES

The USDJPY price continued to grow after the Bank of Japan increased the amount of purchases of 5-10 year Japanese government bonds from 450 billion yen to 50 billion yen. The reason behind the move is due to the central bank looking to support yields. As a result, traders ignored the positive data on average cash earnings growth in Japan, which increased by 0.7% compared to the same period last year.

The forecasted growth in earnings was for only 0.4%. Investors are not in a hurry to build up positions ahead of the labor market data release in the US at 12:30 GMT. In case of stronger than expected figures from the non-farm payrolls, the unemployment rate and average hourly earnings, we may see continued increases of the pair and overcoming the important level of 114.00. In this case the next targets will be at 114.70 and 115.50.

On the other hand, we do not rule out a descending correction with the possibility of hitting the lower limit of the rising channel and a further drop to 112.00.  The main factors that are influencing market sentiment right now are forecasts about future steps of the Fed and the Bank of Japan concerning monetary policies.