Yen's rise on sterling, dollar and euro may not be done yet

Sterling, the dollar and euro dived to near three-week lows on the yen after Bank of Japan delivered monetary policy well shy of market views, and they may yet lose further steam against the Japanese unit.

At about 14:22 BST, the dollar was down -2.5% at 102.64 yen, while sterling shed -1.79% to 136.083 yen and the euro faltered -1.67% to 114.66 yen.

The trinity were at levels against the yen last seen 11 July, 18 days ago. Around the same time, gold was up 0.93% to $1353.7 an ounce.

Earlier on Friday, BoJ kept interest its interest rates steady at -0.1%, but said it would hike its purchases of exchange-traded funds to an annual pace of Y6tn, from Y3.3tn.

The central bank also doubled the size of a lending programme for local companies to $24bn.

"Investors were left empty handed during trading on Friday following the BoJ's expansion of monetary stimulus which fell below market expectations," said FXTM Research's Lukman Otunuga.

"This decision was shocking as the nation continues to be exposed to downside risks while domestic economic data such as GDP and inflation have displayed signs of weakness."

Otunuga, an analyst, summarised the yen's appreciation so far on Friday as "ferocious" and said it could be poised for further gains as a combination of risk aversion and diminishing optimism over the BoJ taking any action invites buyers to attack.

"From a technical standpoint, the USDJPY is turning bearish on the daily timeframe and the breakdown below 104.00 (yen) could open a path towards 101.50 (yen)," he said.

IG's Joshua Mahony was unsurprised by BoJ undershooting market forecasts, citing the policy calls by European Central Bank and Bank of England this month.

"BoJ has used every weapon bar the helicopter and there is going to come a time when the BoJ takes stock to consider whether their policies are even making a difference," he added.