The CHFJPY pair is recording a nearly 1.8% spike today after reaching levels not seen since 1979.
The current dynamics of the Japanese and Swiss currencies have been sustained since the beginning of the year. Among G10 currencies, the Swiss franc, along with the British pound, is performing the best. On the other hand, the Bank of Japan (BoJ) decided to maintain its interest rates and yield curve control (YCC) mechanism at an unchanged level during the first meeting under the new Governor Ueda. The paragraph about keeping rates at their current or lower levels was removed from the statement. While this may be perceived as a hawkish move, the Bank of Japan also said that it will conduct a review of its monetary policy, which will last from 1 to 1.5 years. The JPY weakened as investors took this as a suggestion that no change in BoJ policy will occur until the review is completed. Market sentiment towards the yen has not changed even after Ueda assured during the press conference that it does not mean no change in policy for the next 1.5 years.
Ueda said that the mechanism will remain in place until the Bank's target rate could be recognized as achievable in the near future. Source: Bloomberg
Chart of the CHFJPY pair, W1 interval. Source: xStation 5
