The Yen continues getting cheaper. Overview for 31.10.2018

In the middle of the week, USDJPY is back to its two weeks highs.

The Japanese Yen continues retreating against the USD on Wednesday morning. The current quote for the instrument is 113.28.

The October meeting of the Bank of Japan was over today. All key monetary parameters remained the same: the benchmark rate at -0.1%, the QE program at 80T Yen.

The most interesting things for investors were in the regulator’s comments that followed. The Central Bank told about the financial vulnerability increase in the country due to the banking sector problems. According to the regulator, the banking system was hurt by a long period of low interest rates. Under such circumstances, banks found it difficult to increase loan pricing.

The BoJ Quarterly Outlook Report said the long-term pressure on financial organizations’ profit might destabilize the country’s financial system. This is a bad piece of news for the Yen.

Apart from this, the regulator lowered the inflation assessment: in 2018-2019, it’s 0.9% against 1.1% (three months ago); in 2019-2020, it’s 1.4% against 1.5%. The GDP expectations were also lowered: in 2018-2019, it 1.4% against 1.5%.

In addition to that, earlier in the morning Japan reported on the Industrial Production in September. The preliminary report says that the indicator lost 1.1% m/m against the expected reading of -0.3% m/m. the possible reason is the global trade relations conflict.