USD/JPY: Bank of Japan Holds Rates Steady, Yen Plummets Beyond ¥158 in Six-Week Low

Investors expected to hear more on forward-looking guidance. The lack of it led to the yen plummeting against the dollar.

• The USDJPY pair shot sharply higher Friday morning after the Bank of Japan left its interest rates unchanged between zero and 0.1%. What discouraged investors from buying up the yen was policymakers’ silence on the expected interest rate timeline and whether a hike was coming in the near future. The US dollar gained about 1%, moving from ¥156.70 to a session high of over ¥158.20.
• The Bank of Japan’s controversial decision puts the yen in an unfavorable position. Not only hasn't it been its year so far, but things ahead aren’t looking too bright either. The central bank pledged to start dialing back its ¥6 trillion ($38 billion) monthly bond-buying program, which is a key move in tightening its ultra-loose monetary policy defined by super low rates and ample monetary stimulus.
• With no forward-looking guidance, the yen is largely left at the mercy of forex speculators. At any moment they may decide to take advantage of its battered state, pushing its valuation deeper into the red. So far on the year — starting the uptrend from day 1 — the American dollar has gained a monster 12% against the Japanese currency.