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BoJ adjusted yields policy on Friday, boosting JPY; EUR trends lower as COVID situation deteriorates but British consumer confidence hit one-year high

BLOG March 22, 2021 at 05:43 am (GMT)
  • JPY up on last Friday as BoJ revises its policy on bond yields
  • EURUSD gives up previous week’s gains as COVID situation deteriorates
  • UK consumer morale on the rise, hitting one-year high

Major APAC currencies closed last week with mixed results, with AUD and NZD pressured by rising yields but JPY acquired some gains against USD finally after BoJ adjusted its policy as rumors had indicated earlier. By allowing greater flexibility for the 10-year yields to fluctuate up and down 0.25% around the target of 0%, BoJ has taken measures to activate the bond market which has long been dormant in Japan. Moreover, BoJ also cancelled the ETF purchasing program but nevertheless retains the power to do so in the future if needed. The goal to keep yields “stably low”, however, remains unchanged and has been again stressed by BoJ. After the adjustments, USDJPY settled last week at around 108.884, down about 0.14%.

In Eurozone, EUR ended up falling throughout the week despite USD’s ups and downs. After opening the week at 1.1953, EURUSD spent most of the time last week trending lower. On last Wednesday, it briefly rebounded and reached a weekly high at 1.1986, yet still below the key level of 1.20. Demand on the Euro remains fairly soft as investors holding concerns over the COVID outlook. At France, situation seems to be heading towards a fresh round of lockdown, and Germany is considering posing an extension to its current restrictions.

On the other hand, situations in Britain continues to be promising. Due to a survey on Friday from market research firm GfK, the consumer morale struck a one-year high this month as the public gets increasingly confident that recovery is approaching. Although still below the long-term average at -9, the confidence index had risen to -16 from -23 on a monthly basis, beating the forecast at -20.