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Marketmind: Japan waves ripple far and wide

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Never underestimate the Bank of Japan's ability to move markets. Just as the dollar's rally appeared to be accelerating and worries over Asian currency weakness deepening, BOJ governor Kazuo Ueda indicated a possible shift away from a negative interest rate policy, perhaps before the year is out. Ueda's comments ignited the Japanese Government Bond and currency markets - the yen scored its biggest rise in two months and the 10-year JGB yield leaped to its highest in almost 10 years, scaling 0.70% for the first time since January 2014.

- A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.Just as the dollar's rally appeared to be accelerating and worries over Asian currency weakness deepening, BOJ governor Kazuo Ueda indicated a possible shift away from a negative interest rate policy, perhaps before the year is out.

Analysts at Barclays reckon BOJ officials could flesh out more of their thinking at next week's policy meeting, while Deutsche Bank economists radically changed their BOJ forecasts. The prospect of a radically different - that is, far more hawkish - monetary policy stance in the world's third largest economy has reverberations far beyond Japan's domestic markets, especially in foreign exchange.

Most Asian currencies on Monday rose against the dollar, which posted its biggest one-day decline in two months. The main exceptions being the Indonesian rupiah and Philippine peso, which were little-changed on the day.

 

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Marketmind: Japan jolt as inflation forksWith U.S. markets homing in on this week's critical August inflation update, Japan threw a curve ball into the piece by signalling a possible early end to its easy money stance just as other G7 central banks are mulling an end their tightening. In a weekend interview, Bank of Japan Governor Kazuo Ueda said the central bank could end its 7-year-old negative interest rate policy when achievement of its 2% inflation target is in sight - suggesting the BOJ is considering official interest rate hikes as well as an early end its bond-buying, yield cap policy. 'If we judge that Japan can achieve its inflation target even after ending negative rates, we'll do so,' Ueda said.
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