FX traders get edge on Japan policy

The yen fell to session lows against the dollar and the euro on March 10 after Reuters reported that the Bank of Japan was leaning towards easing monetary policy next week amid government pressure to do more to combat deflation. The story pointed out that many BOJ policymakers remained wary of further easing, which could lead to a split vote at a meeting on March 16-17. Reuters has dominated the FX/monetary policy story from Japan. Reporters dug through a budget report to unearth exclusively in early March that the government would increase its borrowing limit for foreign exchange intervention, a move that could pave the way for the first FX intervention in 2004. The news immediately spooked traders by making clear that Japan is getting serious about intervening to weaken the currency, if the yen pushes back towards the 14-year peak hit against the dollar last November. Reuters was hours ahead of Dow Jones and Bloomberg in reporting the news, which was widely cited in FX research reports.