USD rises more the 0.6 pct vs yen, hits a 2-week high of 123.54 after BOJ kept monetary policy steady and pledged to increase monetary base at annual pace of 80 trln yen.
- The c.bank to increase purchases of ETFS, says will buy ETFS at annual pace of about 300 bln yen under new programme in addition to current ETF buying.
- USD/JPY prices have breached 122.46 (61.8% of the Nov-Dec slide) & the 21-DMA at 122.43. A close above those hurdles would open the way for a retest of the Nov 18 peak at 123.75.
- USD/JPY gains quickly faded, at the time of writing the pair has given up most of the BoJ induced gains and is trading at 122.63.
- USD is likely to make new cyclical highs in the near term as US interest rate expectations adjust higher. Fed's own projections were for 100 bps of hikes in 2016. By contrast, the futures market was only discounting just over 50 basis points of tightening.
Our initial target at 123.35 has been hit, we recommend booking partial profits and continue to hold for TP2.


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