Bank of Japan (BOJ) policymakers remain unperturbed by the yen's recent fall but the central bank has broader concerns about government reaction if USD/JPY hits the 120.00 level, MNI reports, citing sources familiar with the BOJ thinking.

Key takeaways

“The government to voice concern over the potential negative impact for energy costs and other imported goods on households and smaller firms and call for BOJ action.”

“A government call on the BOJ for countermeasures would be a troublesome factor for a policy as the central bank does not have effective tools to guide the currency.”

“But BOJ officials also see that the yen's fall, if it is slow, will be acceptable as Japan is far from a target of a sustained 2% rise in prices. “

“If prices in Japan were above 2%, officials would see yen weakness as undesirable.”

Market reaction

USD/JPY is sitting near-daily lows of 115.82 amid a retreat in the US Treasury yields, as the market awaits the NFP data for fresh directives. The spot is trading modestly flat on the day.