JGBs gain after BoJ keeps asset purchases unchanged, Fed hints at dovish outlook

The Japanese government bonds continued to trade mixed on Thursday after the Bank of Japan (BoJ) kept its asset purchase programme unchanged at its monetary policy meeting concluded early today, while the Federal Reserve sounded more dovish than before at its last policy meeting of the year, also unveiled early today.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, fell 3 basis points to 0.032 percent, the yield on the long-term 30-year note also plunged nearly 3 basis points to 0.728 percent and the yield on short-term 2-year traded 14-1/2 basis points lower at -0.144 percent by 05:40GMT.

The Bank of Japan left its stimulus settings unchanged at its final policy meeting of the year in the face of rising risks to inflation, just hours after the Federal Reserve signalled a slightly more dovish rate path.

The BoJ kept its yield curve-control program and asset purchases unchanged, it said in a statement Thursday, a result predicted by all 49 economists surveyed by Bloomberg.

"Governor Haruhiko Kuroda faces a deteriorating environment. With oil prices tumbling, economists see inflation falling toward zero in the year ahead. Slowing growth in China, the U.S.-China trade war and a disruptive Brexit could all hit Japan’s export-dependent economy, which has contracted in two of the past three quarters," Bloomberg added.

Meanwhile, the Nikkei 225 index closed nearly 3 percent lower at 20,392.60 by 05:45GMT, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained highly bullish at 163.70 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex