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01.10.2018 / 07:30

BOJ Trimmed its Purchases of Long Dated Debt

The Bank of Japan, led by Haruhiko Kuroda, reduced the size of its bond-repurchase offer by 5% in its latest market operation. The bank said it would trim purchases of government bonds with maturities of 10 years to 25 years remaining by ¥10 billion ($1.7 billion). Japan’s central bankers had been tipped as a potential surprise factor for 2018, in response to comments with regards to negative side effects of prolonged quantitative easing in recent months. At the same time, the BOJ is considered the central bank with the loosest monetary policy among its peers. The U.S. dollar advanced against most major rivals Tuesday, but dropped against the yen after the Bank of Japan announcement.

The ICE U.S. Dollar Index was up 0.2% to 92.523, trading around its highest level since Dec. 28 and on track for a third straight rise. The broader WSJ Dollar Index edged up 0.1% to 86.02. Against the Japanese yen, however, the buck fell, last buying ¥112.60, compared with ¥113.09 late Monday in New York. Its other majors rivals, including the euro, the British pound, the Canadian dollar and Swiss franc, all weakened against the greenback in Tuesday trading. The euro fell to $1.1937 from $1.1968, while Britain’s pound dipped to $1.3541 from $1.3568. Against the Canadian currency, the dollar bought C$1.2466, up from C$1.2420 late Monday. Against the Swiss franc, the buck fetched 0.9833 francs versus 0.9772 francs on Monday.

Investors have been hearing more from Fed officials in recent days. Atlanta Fed President Raphael Bostic on Monday said the U.S. central bank should keep raising short-term interest rates, but perhaps at a slower pace than last year. San Francisco Fed President John Williams in a Reuters interview on Saturday called for three rate increases this year, arguing that the already solid economy will get a boost from the Republican tax overhaul. Separately, Cleveland Fed President Loretta Mester in a Reuters interview on Friday said the strong U.S. economy and low unemployment level make the case for four rate increases in 2018.