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Forex Flash: New BoJ Governor Kuroda first press conference in focus - BTMU

FXstreet.com (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ notes that the yen remains on the defensive heading into the first press conference to be held later today by new BoJ Governor Kuroda.

He adds that it has been announced that the press conference will take place at 6pm in Tokyo and will involve a discussion about monetary policy. Further, the Nikkei has reported today that new Governor Kuroda will officially announce a policy shift today to reach the 2.0% inflation target calling for “bold monetary easing both in terms of quantity and quality”. Additionally, he comments that the Nikkei reports that the shift to a more comprehensive easing programme may include extending the maximum maturity of government bonds to be purchased from 3 years out to 5 years, and potentially bringing forward the start of open-ended monetary easing which is planned to begin in 2014 which is favoured by Governor Kuroda.

The measures are all broadly in line with current market expectations which are helping to limit the initial negative yen reaction in the Tokyo trading session although Japanese government bond yields continue to drift lower with the 10-year JGB yield falling to 0.58%. He feels that the ongoing widening of Japan’s trade balance is also helping to weaken the yen. He writes, “Japan’s seasonally adjusted trade deficit widened to JPY1.087 trillion in February raising the previous twelve month cumulative deficit to JPY7.88 trillion. The widening in the seasonally adjusted trade deficit in February was driven by import growth of 6.8%M/M outpacing more subdued export growth of 1.3%M/M.”

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