USD/JPY sharply reacts to strong hint on BoJ’s drop 0.5% cap in 10Y JGB yields

USD/JPY bears jumped in on a Nikkei news article ahead of the Bank of Japan’s meeting on Friday that took USD/JPY down from 141.10 to 139.20 low in a flash.

The Nikkei reported, ” The Bank of Japan will discuss tweaking its yield curve control policy at a policy board meeting Friday to let long-term interest rates rise beyond its cap of 0.5% by a certain degree, Nikkei has learned, in what would be a shift toward a more flexible policy approach.”

This has flipped sentiment around that had otherwise been expecting a non-event in Friday’s meeting considering it was only recently that the BOJ Governor Ueda said there was “still some distance to sustainably achieve 2% inflation target” and that unless their assumptions on the need to sustainably achieve 2% target change the BoJ’s “narrative on monetary policy won’t change.”