Asian stocks waver, yen wobbles as BOJ takes centre stage
Bank of Japan's policy decision when it is likely to lift its inflation forecasts and ponder tweaks to its bond yield control.
The yen weakened 0.19% to 149.38 per dollar but was not far from the two-week peak of 148.81 it touched on Monday after the Nikkei newspaper reported the BOJ would consider making adjustments to its yield curve control (YCC).
The BOJ sets a target of around 0% for the 10-year yield under YCC. Under criticism that its heavy defence of the cap is causing market distortions and an unwelcome yen fall, it raised its de-facto ceiling for the yield to 1.0% from 0.5% in July.
On Tuesday, the 10-year JGB yield jumped 6.5 basis points to 0.955%, its highest since May.
«Markets seem to assume that the ceiling will be lifted by another 50 basis points, but I think the possibility of another doubling (i.e. to 2%) in the ceiling amounting to a de facto removal is under-appreciated,» said Nicholas Chia, macro strategist at Standard Chartered.
«That said, the way foreign currency markets are behaving suggests any move today on YCC may only cap but not reverse the yen weakness,» Chia said.
The dollar index, which measures U.S. currency against six rivals, rose 0.104%.
Sterling was last trading at $1.2151, down 0.14% on the day, while the euro was down 0.09% to $1.0603.
STOCKS DIP IN ASIA
Stocks in Asia were slightly weaker, with MSCI's broadest index of Asia-Pacific shares outside Japan 0.24% lower, while Japan's Nikkei was 0.23% lower.
The Shanghai Composite Index was 0.06% lower, while Hong Kong's Hang Seng Index fell 0.39%.
Overnight, all three major U.S.
