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Forex Flash: BoJ likely to boost asset purchases – UBS

FXstreet.com (Barcelona) - A recent Nikkei newspaper reported overnight that the Bank of Japan "will likely" boost asset purchases by about JPY 1.2 trn per month. That would not in our view qualify as the regime change spoken of by Deputy Governor Iwata during his parliamentary confirmation hearings.

According to Research Analyst Gareth Berry at UBS, “Additional easing on such a modest scale would only correspond to an annual increase of about JPY15 trn. However, the policy meeting, which is currently underway, is not due to conclude until Thursday, and the outcome is not yet set in stone.”

Also, the fine details will be as important as the headline figures themselves. Finally, even if the policy decision itself disappoints we would consider any subsequent USDJPY dip to be a buying opportunity ahead of the next meeting on April 26-27 when semi-annual forecasts are due for revision. A fresh USD/JPY positive reared its head overnight too, and ultimately led to a brief round of broad-based dollar strength.

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This afternoon’s institutional reports were mostly focused on what is coming tomorrow from Japan, the Eurozone and UK regarding central bank policy.
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Forex: EUR/USD back to 1.2845/50

The euro is now retracing ground after another attempt to reach the 200-day moving average around 1.2880/90, although this time the up-move faltered in the vicinity of 1.2870....
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