Tuesday, 10 June 2014

Yen Volatility Near Low Before BOJ, Bond Trading Dries Up


The yen advanced for the first time in three days against the dollar before the Bank of Japan meeting this week amid speculation the central bank’s monetary policy will support the nation’s economy.

A gauge of expected price swings for the yen versus the dollar remained near a record low, while trading in Japanese government debt almost ground to a standstill. BOJ Governor Haruhiko Kuroda said last week the policy of doubling the monetary base and purchasing government bonds is leading to improvement in financial markets and the economy. None of the analysts surveyed byBloomberg News expect the BOJ to expand stimulus when policy makers meet June 12-13.

“There’s nothing to expect from the BOJ this week,” said Kiran Kowshik, a currency strategist at BNP Paribas SA in London. “Some of the data has been weaker but then the BOJ was anticipating that and it has not really surprised them” and they probably will not signal further easing, he said.

The yen appreciated 0.3 percent to 102.23 per dollar as of 8:56 a.m. London time. One-month implied volatility in the pair was at 5.44 percent after falling to a record 5.25 percent yesterday.Japan’s currency strengthened 0.3 percent to 138.96 per euro. The euro was little changed at $1.3592 after dropping to $1.3503 on June 5, the lowest since Feb. 6.


Aussie Gains

The Aussie rose 0.2 percent to 93.73 U.S. cents after climbing to 93.76 cents, the strongest since May 19. The currency gained after China’s central bank announced measures to support smaller companies and agriculture, bolstering the outlook for growth in Australia’s largest trading partner.

Kuroda will hold a press conference after the BOJ’s policy decision on June 13. The central bank has been buying about 7 trillion yen of government bonds a month since April 2013. Only three of the 33 economists surveyed June 3 to 6 by Bloomberg expect additional monetary stimulus in July, down from 12 of 32 in the previous survey.

The Aussie has climbed 5.3 percent this year, the best performance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The U.S. dollar has dropped 0.4 percent, the euro has fallen 1.6 percent, while the yen has gained 2.9 percent.


To contact the reporters on this story: Anchalee Worrachate in London; Lukanyo Mnyanda in Edinburgh at

To contact the editors responsible for this story: Paul Dobson at pdobson2@bloomberg.netKeith Jenkins, Neal Armstrong

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