BOJ to mull ways to make stimulus sustainable amid weak inflation

USD  JPY Needs More Upside Momentum After BoJ Policy Tweak

USD JPY Needs More Upside Momentum After BoJ Policy Tweak

The BOJ pledged on Tuesday to maintain its short-term interest rate target at minus 0.1 percent and chose to guide 10-year JGB yields around zero percent.

The BOJ's Policy Board also decided at a two-day meeting to apply its negative interest rate to a smaller amount of financial institutions' funds, and change the composition of its purchases of exchange-traded funds.

The dollar was 0.72 per cent higher against the yen, on pace for its best day in almost three weeks.

Most major currencies stuck to narrow trading ranges ahead of central bank decisions.

MSCI's all-country world stock index .MIWD00000PUS fell 0.37 percent on weakness in the so-called U.S. FAANG group: Facebook FB.O , AMZN.O , Apple AAPL.O , Netflix NFLX.O and Google parent Alphabet GOOGL.O . "The market is, at least for now, seeing this as negotiations as opposed to the beginning of an all out-out global trade war", Smith said.

Shares in Europe fell, led by a 2.9 percent decline in software maker SAP SE SAPG.DE and a 2.5 percent drop in French industrial gases company Air Liquide AIRP.PA .

"The market is saying "you are fairly valued around these prices so let's wait for the next big story". Our outlook on the Japanese yen remains bearish.

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Sony is declining more than 1 percent, Panasonic is down 0.4 percent and Mitsubishi Electric is lower by 0.1 percent, while Canon is adding 0.3 percent. The statement now reads that "the Bank intends to maintain the current extremely low levels of short and long-term interest rates for an extended period of time".

In commodities, USA crude fell 35 cents to $69.78 a barrel after a sharp rally overnight while Brent fell 36 cents to $74.61.

The dollar index .DXY fell 0.33 percent, while the Japanese yen JPY= retreated slightly, slipping 0.04 percent versus the greenback to 111.07 per dollar.

The euro was flat at $1.1652, after gaining modestly on Friday. The market's response to the new data indicates that other economic factors may play a more significant role in influencing the Yen's price movement.

The central bank has failed to break Japan's entrenched deflationary mindset despite years of heavy money printing, with stubbornly soft inflation sapping its ammunition and global trade woes clouding the outlook for an export-reliant economy.

The two-year Treasury yield rose to a decade-high of 2.69 percent towards the end of last week. Investors will look for further confirmation that USA policy makers plan two more interest rate hikes before the end of this year, while their British counterparts are widely expected to increase borrowing costs.

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