BOJ Outlook

From the FXWW Chatroom: [Dow Jones] The Bank of Japan will send a strong signal to bond market investors if it holds off on its bond-buying operations again on Friday. Traders expect the central bank to offer to buy 1-5 year JGBs at 0110 GMT on what is effectively the last likely day for an operation in January. If it skips the opportunity once again, the BOJ will fall short of its monthly purchasing target range–an outcome that one brokerage house analyst says could be viewed as tapering of its asset purchase program. Investors are still puzzled by the BOJ’s decision to stay out of the market Wednesday, and selling in the bond market has increased as a result. “Investors were caught by surprise and that’s why the market is struggling to understand the BOJ’s true intentions,” the analyst says. Investors will hope for more clarity from a BOJ policy meeting next week.

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