Dollar skids to lowest versus yen since Nov 2014

The dollar skidded to its lowest levels against the yen since November 2014 on Tuesday, as a sell-off in European and U.S. stocks continued into the Asian session and stoked demand for the perceived safe-haven Japanese currency.

The dollar was last at 114.85 yen JPY=, down 0.9 percent, after dropping as low as 114.205.

The flight to safety helped the yield on the benchmark 10-year Japanese government bond turn negative for the first time, sending it as low as minus 0.035 percent JP10YTN=JBTC.

JGBs have been on a bull run since the Bank of Japan adopted negative interest rates on Jan. 29, under which banks have to pay interest on certain deposits held at the BOJ. The central bank's announcement initially sent the dollar as high as 121.70 yen, before those gains unravelled.

"In terms of safety, the yen could actually be the most attractive currency right now, which I'm sure the policymakers don't want to hear," said Bart Wakabayashi, head of foreign exchange for State Street Global Markets in Tokyo.

Three-month dollar/yen implied volatility - an indicator of how much currency movement is expected in coming months - jumped as high as 13.120 percent JPY3MO= on Tuesday, its highest since September 2013, as the yen soared.

Global Stock Market News

The Bank of Japan's recent shift to negative rates has fuelled concerns that ever-more exotic monetary policy is rapidly reaching the point of diminishing returns.

Yet murmurings about the risk of recession in the United Sates has also led investors to wager the Federal Reserve will have to slow, or suspend altogether, plans to normalise rates.

Futures markets have priced out any chance of a hike in March and imply a funds rate of just 0.43 percent by December <0#FF:>. The current effective funds rate is 0.38 percent.

That has pulled down 10-year Treasury yields to their lowest since early 2015 at 1.69 percent US10YT=RR and undermined bullish bets on the U.S. dollar.

It touched a six-week trough on the Swiss franc CHF=, while the euro edged up to $1.1217 EUR=. Against a basket of currencies, the dollar eased 0.1 percent to 96.485 .DXY.

The dollar dived as far as to 114.205 yen JPY=, having been above 121 just a week ago, while the euro fell as much as one percent to 128.31 yen EURJPY=.

The yield on Japan's benchmark 10-year government bond JP10YTN=JBTC turned negative for the first time as the Nikkei stock index tumbled.

The 10-year JGB yield touched minus 0.010 percent. It was the first time a G7 nation's 10-year government bond yield has turned negative, although yields on German bunds have come relatively close.

With more and more sovereign bonds paying negative rates, the relative cost of holding gold has seemed less and less of a burden. The metal XAU= reached its strongest since June at $1,200.60 an ounce, and last traded at $1,193.60.

Oil prices bounced slightly after three sessions of losses. Brent futures LCOc1 added 11 cents to $32.99 a barrel, while U.S. crude CLc1 rose 34 cents at $30.03.

BOJ keeps base money target, launches plan to promote capex, wages

The Bank of Japan maintained its money printing drive at the current rate on Friday, but reorganized its massive stimulus program to advance premier Shinzo Abe's plans to prod reticent companies into boosting wages and investment.

As widely expected, the central bank kept intact its "quantitative and qualitative easing" target of increasing or cash and deposits in circulation by 80 trillion yen ($660 billion) and the pace at which it buys government bonds and trust funds investing in stocks and property.

But it decided to extend the duration of the Japanese government bonds (JGBs) it buys from 10 to 12 years from 2016 and set up a 300-billion-yen fund to buy exchange-traded funds (ETFs) that specifically target firms actively spending on capital expenditure and wages.

BOJ Governor Haruhiko Kuroda said the new steps do not amount to expanded monetary easing.

Friday's moves underscore the BOJ's resolve to aid Abe's efforts to pressure companies into diverting more of their record profits to wage hikes and new investment, which are crucial to sustainably pull the economy out of deflation.

But the new policy emphasis also underscores the BOJ's concerns over how long it could keep buying assets at the current rate, having already gobbled up 30 percent of JGBs on issue.

The central bank said after its December monetary policy meeting it would initially target ETFs that track the JPX-Nikkei 400 index which features companies that promote transparency and good governance.

The BOJ also said it would start selling from April next year the shares it had bought from financial institutions, giving it the power to buy shares of companies that meet its wage and investment standards and sell shares of those that don't.

Tokyo stock prices initially surged on the announcement but quickly pared gains as markets saw the new steps as a return to the incremental policy style BOJ Governor Haruhiko Kuroda said he had abandoned when launching his QQE program in 2013.

Asian Stock Market News - Asian Shares Jumped

Asia shares climb, dollar slips on Fed wagers

Asian shares jumped on Thursday and the dollar backed off highs on expectations the Federal Reserve would be confident enough of the U.S. economy to raise rates in December but would then proceed with great caution on further tightening.

The pick-up in risk sentiment combined with the dip in the dollar gave commodities a reprieve from recent selling, with oil and gold inching higher.

Financial spreadbetters expected opening gains of 0.45 percent for Britain's FTSE 100.FTSE, 0.89 percent for the German DAX .GDAXI and 0.88 percent for France's CAC 40.FCHI.

The Bank of Japan surprised no one at its regular policy meeting by maintaining the current pace of asset buying, though many still suspect it will have to ease again at some point to force inflation higher.

Japan's Nikkei .N225 firmed 1.07 percent, brushing aside a disappointing report on exports and imports.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1.98 percent, while Australia's main index AXJO jumped 2 percent for a third straight session of gains.

After a slow start, Chinese markets caught the better mood and the CSI300 index .CSI300of the largest listed companies in Shanghai and Shenzhen added 0.9 percent.

Sentiment was supported by the Dow .DJI which ended Wednesday with a gain of 1.43 percent, while the S&P 500 .SPX added 1.62 percent and the Nasdaq .IXIC 1.79 percent.

BOJ could ease further early next year on weak prices

The Bank of Japan could ease monetary policy further early next year, with nearly half of the analysts surveyed by Reuters expecting it to happen in January as consumer prices struggle to meet central bank projections.

A man walks past the Bank of Japan (BOJ) building in Tokyo, October 30, 2015.

Recent revisions in the central bank's inflation projections have prompted five out of 12 analysts polled by Reuters to push back their expectations for the timing of possible BOJ easing.

The BOJ last month pushed out the timing in which it expects to achieve its 2 percent inflation target by six months to the second half of next fiscal year, indicating it may want to wait and watch a while longer before easing policy.

Many analysts see the BOJ's next policy action will be to expand its stimulus program with five out of 12 projecting the central bank could ease again in January, according to the poll taken between Nov. 5 and 11.

Two analysts said the BOJ is likely to ease again in March and another two said the central bank could do so in April. The remaining three analysts each chose November, December of this year and next October.

Asian Stock Market News - Bank Of Japan's Decision

Asian shares poised for best month since Jan 2012

Bank Of Japan

Asian shares edged higher on Friday and were on track for their biggest monthly rise since January 2012, as global central banks kept stimulative policies intact and many hinted at further steps to re-energize their economies.

European shares were set to open on the bright side, with financial spreadbetters expecting Britain's FTSE 100 .FTSE to open as much as 0.3 percent higher, Germany's DAX .GDAXI 0.6 percent, and France's CAC 40 .FCHI 0.4 percent.

The Nikkei stock index .N225 slipped briefly after the Bank of Japan stood pat and then regained its composure to end up 0.8 percent at a more than two-month high, buoyed by a media report that the government is considering a supplementary budget of over $25 billion.

The Nikkei rose 1.4 percent for the week and jumped 9.7 percent for the month, the best monthly gain in two years.

The BOJ's decision to keep monetary policy steady was in line with most expectations, but some investors had speculated the central bank would deliver some additional steps to support Japan's economy. 

The BOJ also trimmed its price and growth forecasts on Friday, and many still expect it to eventually deliver more easing.

"The BOJ will probably wait to see whether the Fed may move in December, before deciding to ease further," said Hiromachi Shirakawa, chief economist at Credit Suisse Securities Japan.

Asian Stock Market News - Fed, BOJ Awaited

Asian shares consolidate gains after rally; Fed, BOJ awaited

Japan's Nikkei

Asian shares fell on Tuesday after a four-week rally ran out of steam as investors took cover ahead of central bank meetings in the United States and Japan later in the week, while disappointing U.S. home sales weighed on the dollar.

European markets were set to open flat to lower, with earnings from major companies such as Deutsche Bank < DBKGn.DE> and Novartis (NOVN.VX) in focus.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.7 percent.

China's main indexes .CSI300.SSEC slid more than 2 percent at one point, pressured by concerns about weak bank profits and growing bad loans, but pared losses by early afternoon. [.SS]

Japan's Nikkei .N225 eased 0.8 percent, though it remained near a two-month high.

Even as investors moved to the sidelines after a rally that has seen regional stocks rise more than 12 percent in a month, market strategists are becoming more optimistic over the outlook for equity markets in the near term.

Risk sentiment has been supported by China's rate cut last week -- its sixth in less than a year -- and the prospect of more easing from the European Central Bank in December.

There has been speculation the Bank of Japan might expand its asset buying campaign at a policy meeting on Friday, though recent reports make it less likely.

Dealers said there was no obvious news behind the Asian stock weakness on Tuesday, though some noted tensions in South China Sea as the U.S. Navy sent a destroyer close to artificial islands built by China, drawing an angry rebuke from Beijing.

Still, some players were likely squaring positions ahead of the U.S. Federal Reserve meeting on Tuesday and Wednesday.

Asian Stock Market News - BOJ Meeting

Weak Japan inflation, output data to cast cloud over BOJ meeting

A woman buys eggs at a wholesale shop in Kawasaki, nearby Tokyo

Japan's core inflation probably slipped for a second month in September, while factory output fell for a third month in a row, a Reuters poll showed, adding to headaches facing Bank of Japan policymakers as they head into a key policy meeting on Friday.

Private spending data also due next week is expected to show modest improvement, helped by holiday spending, but the rate of recovery likely remained moderate due to slow growth in wages.

The economic data next week will be among the last clues for investors and the BOJ on how the economy performed in July-September after it contracted in the second quarter.

Some economists believe activity shrank further over the summer, sending the economy back into recession and adding pressure on policymakers to offer fresh stimulus.

The core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, is expected to have slipped 0.2 percent in September from year earlier, a poll of 22 analysts showed.

Industrial production likely declined 0.5 percent in September from the previous month, which would be a third straight monthly fall following a revised 1.2 percent drop in August and a 0.8 percent fall in July.

The jobs-to-applicants ratio likely improved to 1.24 in September, which would be the highest since January 1992 when the ratio was at 1.25, according to the poll. In August, the ratio was at 1.23.

Asian Stock Market News - Bank of Japan Exclusive

BOJ to cut price forecast for next FY only slightly

A man walks past the Bank of Japan (BOJ) building in Tokyo.

The Bank of Japan will cut its growth and inflation outlook for this fiscal year at a rate review next week but only slightly tweak its projections for next year, sources said, possibly tempering expectations that the central bank will soon ease monetary policy further.

By not straying far from its current projections for next year, the BOJ can maintain that it is still broadly on course to meet its inflation goal of 2 percent next year without needing to step up its massive asset purchase program, people with direct knowledge of the matter told Reuters.

Critics say the program has been only marginally effective and distorts the bond market, and the BOJ board itself has not been unreservedly behind it.

Finance Minister Taro Aso also expressed doubt on Friday that further monetary stimulus would help achieve the inflation target.

As Japan flirts with recession, hit by weak exports, the BOJ is preparing to cut its core consumer inflation forecast for the fiscal year that began in April to below 0.5 percent in a semi-annual report due out on Oct. 30, the sources said. It forecast inflation of 0.7 percent three months ago.

But the bank, which is trying to bring an end to decades of deflationary pressure, will only cut by 0.1-0.2 point its forecast that price rises will accelerate to 1.9 percent next fiscal year, keeping it near its target, they said.

The sources said the forecasts had not been finalised and changes could be made ahead of the announcement. The projections are compiled by the central bank's nine policy board members.