2018.07.3102:10:00UTC+00Yen Weakens As BoJ Maintains Stimulus; Brings Flexibility To Policy Framework

The Japanese yen drifted lower against its major counterparts in the Asian session on Tuesday, after the Bank of Japan kept its stimulus programme unchanged, while announcing more flexibility in bond purchases and plan to keep very low rates for "extended period of time."

The bank said it intends to maintain the current extremely low levels of short and long-term interest rates for an extended period of time.

The bank will purchase government bonds so that the yield of 10-year JGBs will remain at around zero percent. "While doing so, the yields may move upward and downward to some extent mainly depending on developments in economic activity and prices," the bank said.

The BoJ is set to conduct purchases of Japanese government bonds in a flexible manner so that the outstanding amount will increase at an annual pace of about JPY 80 trillion.

The board retained the -0.1 percent interest rate on current accounts that financial institutions maintain at the bank.

Data from the Ministry of Economy, Trade and Industry showed that Japan industrial output fell 1.2 percent on year in June.

That missed forecasts for an increase of 0.6 percent following the 4.2 percent jump in the previous month.

The currency was lower against its major counterparts on Monday, with the exception of the greenback.

The yen depreciated 0.5 percent to a 5-day low of 146.16 against the pound, from a high of 145.37 seen at 12:00 am ET. The yen is seen finding support around the 148.5 region.

Survey from GfK showed that the U.K. consumer confidence weakened further in July, with an index score of -10.

That missed forecasts for a reading of -9, which would have been unchanged from the June reading.

The yen lost 0.6 percent to a weekly low of 111.44 against the greenback, after rising to a 5-day high of 110.75 at 12:00 am ET. Continuation of the yen's downtrend may see it challenging support around the 113.00 level.

The Japanese currency fell to 130.40 against the euro, its lowest since July 23, and marked a 0.5 percent slide from a high of 129.70 touched at 12:00 am ET. Next key support for the yen is likely seen around the 133.00 region.

The yen weakened to near a 2-week low of 112.75 against the Swiss franc, following an advance to 112.12 at 12:00 am ET. The yen is poised to challenge support around the 114.00 mark.

The yen slipped to an 11-day low of 75.96 against the kiwi and a 5-day low of 82.63 against the aussie, reversing from its recent highs of 75.57 and 82.15, respectively. The yen had closed Monday's trading at 75.74 against the kiwi and 82.24 against the aussie. If the yen extends decline, 77.00 and 84.00 are possibly seen as its next support levels against the kiwi and the aussie, respectively.

Having advanced to a 6-day high of 84.75 against the loonie at 12:00 am ET, the yen reversed direction and fell back to 85.27. On the downside, 87.00 is likely seen as its next support level.

Looking ahead, German jobless rate for July, Eurozone jobless rate for June, preliminary consumer inflation for July and advanced GDP data for second quarter are due in the European session.

In the New York session, Canada GDP data for May and industrial product price index for June, U.S. personal income and spending data for the same month, S&P/Case-Shiller home price index for May and consumer confidence for July are scheduled for release.