BoJ preparing to purchase more Japanese government bonds on Monday

The Bank of Japan again broke its daily record for Japanese government bond purchases Friday as yields defied its 0.5% cap, in a sign of the rising market pressure for another policy retreat by the central bank.

The BOJ bought roughly 10 trillion yen ($78 billion) in JGBs over the past two days, with a 5 trillion yen purchase on Friday topping the high it had just set Thursday and is preparing to purchase more Japanese government bonds on Monday, according to the Nikkei.

''The BOJ will kick off the year's first two-day policy board meeting Tuesday. Ahead of this, many in the central bank believe that it should take a wait-and-see approach on policy changes.''

USD/JPY update

In last week's analysis, USD/JPY drops to fresh lows on BoJ sentiment, scarred by US CPI also, it was noted that USD/JPY was under pressure due to that headline did the rounds that the Bank of Japan, as reported by Japanese media Yomiuri, was about to make another hawkish move during its monetary policy meeting. 

The pair has since continued lower and eyes the 126.50s. However, the daily M-formation could hold up the bears and attract a bid towards the 129.50s beforehand.