Dollar yen fell steadily from 120.35 to 119.40 (-95 pips) from Asia to Europe following the Bank of Japan's decision to leave monetary policy unchanged on both the ultra low interest rate and their base monetary target of JGBS at the annual pace of 80 trillion yen. The central bank refrained from adding more stimulus even after Japan's economy shrank in the last quarter. The news dissapointed yen sellers who expected more QE, thus yen buying pushed the rate lower.
The vote from the BOJ monetary policy governors came in as 8-1 as expected by many analysts with Kiuchi dissenting once again. However, he did not vote on zero rates as he normally would, but instead voted to taper the annual pace of QE to 45 trillion yen, adding to yen buying interest.
BOJ Governor Kuroda gave an optimistic statement that the central bank sees a gradual recovery of Japan's economy and return to growth and the BOJ members warned of slowing demand in emerging markets was taking a toll on Japan's exports and industrial output.
Expect a short-covering rebound around the 119.00-119.40 level as the NY market opens.
Chart: WorldWideMarkets Alpha Trader