The yen extended gains after the Bank of Japan indicated it will reduce monthly buying of superlong government bonds, in a reminder that it may still move to cut stimulus this year.
The BOJ bought ¥150 billion ($1.04 billion) of 10-to-25 year debt on Tuesday. That was the same amount as the previous purchase on Dec. 25, but given that the central bank has cut back monthly operations, this points to a decrease in buying for all of January.
Market rates suggest that traders still expect the BOJ to end its negative interest-rate policy later this year, though speculation of a move this month has largely tapered off. Traders are betting the central bank will avoid steps that would weigh on the economy in the aftermath of a powerful earthquake that hit Japan on Jan. 1.