Bank of Japan May Increase Economic Stimulation Due to the Virus Outbreak

On February 5th, the exchange rate of USD against JPY reached 109.72, a record high since January 23th. The deputy governor of Bank of Japan said if the economic recovery in Japan stops, BOJ will increase the economic stimulation, and he warned that the public health emergency in Asia may harm business confidence and global trade.

He added that BOJ must pay close attention to the impact of the disease and reduce it by suspending supply chain and controlling the number of international tourist arrivals. And the bigger risk may increase the possibility of losing 2% dynamic of price stability. Therefore, BOJ will take extra easing measures without hesitation, including policy measures such as further negative interest rate.

According to CFTCs latest report, speculative net shorts of yen decreased by 8,676 to 36,025 contracts. Meanwhile, speculative longs reduced by 4,920 to 45,676 contracts, while speculative shorts dropped by 13,596 to 81,701 contracts.

USD/JPY Daily Pivot Points: 109.57-109.73

S1: 109.46 R1: 110

S2: 109.11 R2: 110.19