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Forex pairs in this Article » USD/JPY (Barcelona) - The Nikkei managed to hold onto overnight gains of 0.7% after the BoJ announced that it would be keeping the pace of asset purchases and rates unchanged. This was largely expected but in its commentary, the BoJ noted that the Japanese economy had appeared to stop weakening with exports and industrial production showing signs of bottoming.

According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, "The BoJ also upgraded its outlook and which we expect will lead to a moderate recovery path, although near term inflation is expected to be around zero." Earlier in the session former BoJ deputy governor Kazumasa Iwata said in a statement that the Yen needs to correct for the BoJ to reach its 2% price target which helped the Yen reverse some of the earlier gains.

The USDJPY was off its lows of 92.83 Thursday about 24 hours ago, but still off the highs of 94.46 at the start of the week as we head into the G20 meeting later today. Iwata, who has been hailed as one of the possible successors to Shirakawa, also said there are many ways for monetary policy to boost the economy including through longer-term JGB purchases.
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