BOJ to consider policy tweak to allow 10-year yields to exceed 1% — report

<p>USD/JPY is falling on a Nikkei <a href="https://asia.nikkei.com/Economy/Bank-of-Japan/BOJ-to-tweak-policy-again-to-allow-10-year-yields-to-exceed-1" target="_blank" rel="nofollow">report</a>.</p><blockquote>The Bank of Japan is set to consider a further adjustment to its yield
curve control (YCC) framework at Tuesday's monetary policy meeting,
potentially allowing 10-year Japanese government bond yields to rise
above 1%, sources close to the matter told Nikkei.</blockquote><p>The headline in the story says "BOJ to tweak policy again to allow 10-year yields to exceed 1%" but the text only says they will 'consider it'. There is no talk of what ceiling, if any, could replace the policy but traders are speculating 1.25% or 1.50%.</p><p>There is much speculation on the BOJ decision tomorrow and I strongly suspect the dollar weakness on Friday was due to USD/JPY selling on a <a href="https://www.forexlive.com/centralbank/boj-likely-to-raise-cpi-forecast-to-2-range-report-20231027/" target="_blank" rel="follow">report </a>about higher inflation forecasts. We saw another round of it today as USD/JPY longs clear out or central bank decision risk.</p><p>Today's report also says the BOJ is also likely to more flexibly conduct its JGB purchase operations, citing sources.</p><p>The story cites the yen as a factor in the BOJ's decision, saying that raising the YCC could help cap USD/JPY at 150.00, though it's not clear if that's speculation or sourced. </p><p>Aside from broader markets, there is fear that a sudden lift on yield curve control could further push up global yields.</p>

This article was written by Adam Button at www.forexlive.com.