Currency and sovereign debt markets were steady in Asia-Pacific trading on Tuesday morning ahead of the Bank of Japan’s highly anticipated monetary policy statement.
The yield on 10-year Japanese government bonds, which moves inversely to price, was down 1 basis point at 0.085 per cent following the BoJ’s third intervention in the space of a week on Monday amid speculation that the central bank might adjust its stimulus programme.
Speculation has centred on a possible change to the BoJ’s yield curve control policy and potential changes to its ETF programme policy. However, Capital Economics analysts did not think a “major policy shift” from the BoJ was likely but said a review of the impact of quantitative and qualitative easing or technical policy tweaks may be announced.
The yen was basically unchanged against at ¥111.08 per dollar. The dollar index, a measure of the greenback against a basket of peers was up 0.1 per cent and yield on the 10-year US Treasury was also down 1bp at 2.967 per cent.
The onshore renminbi exchange rate, which moves within a trading band of 2 per cent in either direction, was 0.3 per cent weaker at Rmb6.8301.
ING China economist Iris Pang noted China’s purchasing managers’ indices pointed to “expectations of slower export-related activities” amid the escalating trade war between the US and China. While domestic consumption remained “strong”, she added the implementation of further tariffs would see the renminbi “even weaker”.
The Australian dollar was 0.2 per cent higher at $0.7418 after building approval data for June beat expectations, while New Zealand’s dollar was stable at $0.6820 despite an ANZ survey of business confidence slumping to a 10-year low.