Bank of Japan Increases Quantitative Easing

In an effort to slow the appreciation of the Japanese yen in spot forex trading, the Bank of Japan has expanded the quantitative easing program. (Japan likes a weak yen, since it gives them an advantage in global trade.) However, the move isn't working this morning as the yen gains against the U.S. dollar on the spot forex market.

Indeed, the USD/JPY pair is selling off today at a rather rapid pace, as GFT's Boris Schlossberg reports in FX360:

As we wrote earlier, “the market is clearly viewing these policy moves as actions that are too little too late as the BOJ continues to fight a rear guard action against yen appreciation.   In fact, instead of steadying the decline in USD/JPY today’s announcement may have only hastened its fall, as speculators may now continue to sell the pair with impunity in the face of these effete initiatives by the Japanese authorities.” 

However, the real movement in the Japanese yen is likely to come after economic news is released from the U.S. If a double dip recession truly appears to be on the way, the yen is likely to remain stronger against the U.S. dollar -- no matter what BOJ officials do.