(Bloomberg) -- The yen got a brief boost Thursday from a report that the Bank of Japan is poised to end its negative rate policy next week, and then quickly surrendered the advance as traders lacked conviction around the central bank’s decision.
- Currency sees brief gain after Jiji report on BOJ next week
- Report ‘has already been effectively zeroed out’: Monex
The view at the BOJ is strengthening that officials’ 2% inflation target has been sustainably achieved, although they’ll make a final decision later this week based on the final results of spring wage talks, Japanese news service Jiji reported without citing any sources for its information.
The BOJ decision has been a key topic in currency markets ahead of the March 18-19 meeting, with traders looking for the negative rate policy to end in March or in April. Investor hopes for a yen rally on the conclusion of negative rates have mostly faded as the strength of the US economy has taken center stage.
“The knee-jerk positive reaction for the yen from Jiji’s reporting has already been effectively zeroed out, telling me that no one knows what to believe,” said Helen Given, a foreign-exchange trader at Monex. “This may be the most truly live central bank meeting we’ve seen in quite some time, and no one wants to get burned on the wrong side of the market preliminarily.”
The yen initially reached about 0.2% stronger on the day following the Jiji report, then reversed course and traded around 0.4% weaker relative to Wednesday, at about 148.30 per dollar.
The Bank of Japan has been sending clear signals that the exit form the world’s last negative policy regime is approaching and wage increase demands are adding to inflation progress toward the goal.
Previous reports have hinted a move is imminent, including Reuters saying last week that a growing number of BOJ policymakers are leaning toward ending negative rates this month, citing people familiar with the matter. Nikkei said that policy makers will discuss ending negative rates at the meeting.
