• BOJ maintains YCC band unchanged, tweaks forward guidance
• BOJ’s Ueda says will not hesitate to ease monetary policy further if necessary
• BOJ’s Ueda: Will make changes to monetary policy as needed during review period
• BOJ’s Ueda: Policy review does not signify stance that monetary easing was ineffective
• BOJ’s Ueda acknowledges yen drop today but does not want to comment on it
• Eurozone Q1 preliminary GDP +0.1% vs +0.2% q/q expected
• Germany Q1 preliminary GDP 0.0% vs +0.2% q/q expected
• France Q1 preliminary GDP +0.2% vs +0.2% q/q expected
• Spain Q1 preliminary GDP +0.5% vs +0.3% q/q expected
• Italy Q1 preliminary GDP +0.5% vs +0.2% q/q expected
• Saxony April CPI +7.6% vs +8.3% y/y prior
• Bavaria April CPI +7.2% vs +7.2% y/y prior
• France April preliminary CPI +5.9% vs +5.7% y/y expected
• Spain April preliminary CPI +4.1% vs +4.4% y/y expected
• Germany April unemployment change 24k vs 10k expected
• US officials reportedly coordinating rescue talks for First Republic Bank

Markets:

• USD leads, JPY lags on the day
• European equities lower; S&P 500 futures down 0.3%
• US 10-year yields down 5.5 bps to 3.473%
• Gold down 0.3% to $1,982.89
• WTI crude up 0.8% to $75.32
• Bitcoin down 1.2% to $29,256

It was mostly all about the BOJ today as the central bank delivered a late decision, though without much surprises.

There was just a mild tweak to the forward guidance but the key takeaway is that they did not deliver any policy changes nor did they hint at any to come in the months ahead. The yen fell right off the bat and extended losses ahead of Ueda’s first policy press conference as BOJ governor.

My take was that he definitely overcommunicated and stressed on things he needn’t to. The central bank said that they were going to conduct a policy review, which could take longer than a year to complete. And that was enough for markets to take it as a more dovish tilt, in spite of Ueda’s back and forth explanations.

USD/JPY raced higher from 133.80 all the way to above 136.00 in European trading, gradually extending gains throughout the session. The yen’s capitulation was broad-based with EUR/JPY also climbing up to 149.50 – its highest levels since December 2014. Meanwhile, GBP/JPY also climbed up to 169.50 which is its highest levels since November last year.

The BOJ decision weighed on bond yields initially but that worsened after German Q1 GDP disappointed on estimates. The German economy was seen stagnating in the first three months this year and that saw the euro slip alongside regional bond yields, while equities also nudged lower amid global growth worries.

EUR/USD fell back from 1.1010 to 1.1080 as the dollar caught a bid across the board. GBP/USD also declined from 1.2470 to 1.2450 before recovering slightly to 1.2460 now.

Elsewhere, AUD/USD remains under pressure as it is down 0.7% to 0.6580 – its lowest levels in seven weeks.

It was certainly a lively session and looking ahead, we still have US PCE price data as well as month-end trading to look forward to before the weekend comes around.

This article was written by Justin Low at www.forexlive.com.