USDJPY, Nikkei Plunge As BoJ Disappoints With "No Change"

While only 5 of 40 economists expected a rate cut and only 7 of 39 any additional easing, hopes were rife for some additional ETF buying or hints at further stock purchasing by The Bank of Japan... but no. USDJPY immediatley plunged to a 104 handle and Nikkei 225 crashed 300 points.


As Bloomberg reports, for a two-day meeting, this was the BOJ's earliest announcement since June 2014. Some more headlines crossing terminal:

  • BOJ Board Votes 7-2 to Keep Neg Rate Unchanged - Sato, Kiuchi Dissented on Vote on Negative Rate
  • BOJ Board Votes 8-1 to Keep monetray base target
  • BOJ: Production Continues to Be More or Less Flat After Quake
  • BOJ: Japan's Economy Continues to Recover Moderately
  • BOJ: Needs to Be Mindful of Risks to Price Trend
  • BOJ slightly more bearish on price outlook, admitting that CPI might be ``a little negative'' or around 0% for the time being.
  • BOJ says inflationary expectations have weakened recently, yet no action. Kuroda's explanation later today will be interesting.
  • 55 percent of economists forecast a BOJ move at the next BOJ meeting on July 29, in a June 6-10 Bloomberg survey. How many will changed their minds after the BOJ did nothing even with the yen at the highest since September 2014?

Risks highlighted in the statement include uncertainties surrounding emerging and commodity-exporting economies, particularly China, developments in the U.S. economy and the European debt problem.

The doves and the hawks are growing further apart...

 

And the "no change" decision has crushed USDJPY and Japanese stocks...

 

Nikkei 225 is testing the critical 15,500 level once again...

 

USDJPY is now at its lowest since Sept 2014 and 17% from the June 2015 highs...

 

The USDJPY tumble is dragging US equity futures lower... Dow Futs -180 from post-Fed spike highs...


Finally, as Enda Curran, Bloomberg's Chief Asia Economics Correspondent notes,

Is Kuroda handing the growth baton to the government? That's been a theme of G-7 and G-20 policy gatherings this year that it's time for governments to step in and do more for growth by spending money and pushing through reforms. It's hard to pick up any sense of urgency from this on the BOJ side.
 

When asked what he thought of Kuroda's decision, Shinzo Abe said "Depends."

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