When the Bank of Japan decides, and nobody knows when

[Fairman]

When the Bank of Japan decides, and nobody knows when

Most major central banks announce at a fixed time. The Bank of Japan does not. Its policy statement lands when the meeting ends, which can be anywhere across a window of a couple of hours, often around the Tokyo midday break.

Calendars list an estimated time, and it is only that. The release can arrive an hour earlier or later.

This uncertainty creates a different type of risk. A scalper who closes positions in time for a scheduled 14:00 event has a clear plan. With the BoJ, the event can fire at any minute in a stretch of hours, and positions in yen pairs stay exposed throughout.

Reactions are sharp. USDJPY and the yen crosses can move 50 to 100 pips in minutes. Liquidity in the Tokyo lunch lull is thin, which amplifies everything.

Rumours of the timing also circulate, based on how the previous meeting ran. Some traders follow Japanese news feeds that report the end of the meeting before the statement is out.

Ways to handle it include staying out of yen pairs for the whole window on meeting days, trading smaller, or using strict stops with a realistic estimate of slippage.

The lesson extends beyond the BoJ. Any event with a floating time deserves more caution than one with a precise time stamp.

A quick historical exercise helps. Pull the tick data for the last eight or ten meeting days on the yen pairs, mark the time of the first big move on each, and see how the actual timing compared with the calendar's estimate. The spread of those times gives a realistic window to avoid. Most traders who do the exercise discover that the window is wider than they assumed, and that a handful of meetings produced moves far larger than the rest.

How have yen pairs behaved in the hours around previous BoJ announcements, and when did the move actually start?