Yen Extends Rise, Bonds Fall on BOJ Policy View
The yen hits a fresh one-month high against the dollar while government bonds extend declines as speculation grows the Bank of Japan will end the world's last subzero interest rate as early as this month.
USD/JPY drops as much as 0.4% to 147.53, the lowest level since Feb. 2, before last trading at 147.83; the currency pair falls for a fourth straight day.
Declines in USD/JPY come as momentum and leveraged funds look through Japanese household spending data and begin initiating long yen positions, according to Asia-based FX traders.
The dollar-yen will probably be top-heavy before the BOJ's March 18-19 meeting, but is unlikely to fall through 147 as market has already largely priced in an end to negative rate this month, says Yukio Ishizuki, senior currency strategist at Daiwa Securities.
Yield on policy-sensitive two-year sovereign notes touches 0.2% for the first time since 2011 while futures for 10-year Japanese sovereign notes are unchanged at 146.25.
The central bank excludes 10-year climate transition bonds from its debt-purchase operations after buying nearly half of its outstanding amount in the previous operation; five-year transition notes are included.
Data released earlier in the day shows household spending shrank the most in almost three years, casting a cloud over the economy's growth prospects.
Source: Bloomberg
