Yen Advances As BoJ Refrains To Expand Asset Purchase Program
The Japanese yen climbed against its major rivals in Asian deals on Tuesday, erasing its early losses, after the Bank of Japan refrained from expanding its asset purchase program despite signals of faltering economic momentum.
In a statement, the BoJ announced that the policy board headed by Governor Haruhiko Kuroda decided by an 8-1 majority vote to maintain its target of raising the monetary base at an annual pace of about JPY 80 trillion. The decision was widely expected by economists.
The bank also revealed that private consumption has been resilient and housing investment has been picking up against the background of steady improvement in the employment and income situation.
The bank said that the annual rate of increase in consumer prices was flat. Inflation expectations appear to be rising on the whole from a somewhat longer-term perspective.
BOJ Governor Haruhiko Kuroda will hold a press conference at 2:30 am ET, which could give more clues about monetary policy. Kuroda’s comments are likely to closely watched by traders, given the worsening price outlook.
Most Asian markets are trading in red, as caution prevailed ahead of the outcome of the Fed meeting, due Thursday. Economists are divided over whether the Fed will lift its rates amid signs of a slowdown in China’s growth and the recent volatility in global markets.
Monday, the yen was trading in a positive territory amid safe-haven status, as worries over a slowdown in China prevailed after mixed data released on Sunday. The currency added 0.28 percent against the greenback, 0.47 percent against the euro, 0.18 percent against the franc and 0.3 percent against the pound yesterday.
In Asian trading, the Japanese yen climbed to 119.91 against the greenback and 135.83 against the euro, reversing from its prior lows of 120.65 and 136.41, respectively. The yen ended Monday’s trading at 120.23 against the greenback and 136.04 against the euro. On the upside, the yen may locate resistance around 118.00 against the greenback and 134.00 against the euro.
The yen, having fallen to 124.59 against the Swiss franc and 186.10 against the pound in prior deals, reversed its course and was trading at 123.99 and 185.05,respectively. The yen is likely to find resistance around 123.00 against the franc and 184.00 against the pound. At yesterday’s close, the yen was worth 124.14 against the franc and 185.46 against the pound.
The yen was trading higher at 75.74 against the kiwi and 90.42 versus the loonie, following a decline to 76.40 and 91.04, respectively in previous deals. The next possible resistance for the yen may be located around 74.00 against the kiwi and 88.00 against the loonie. The kiwi-yen and the loonie-yen pairs were worth 76.08 and 90.64, respectively at Monday’s close.
The yen bounced off from its previous 2-week low of 86.33 against the aussie with the pair trading at 85.50. Continuation of the yen’s uptrend may lead it to a resistance surrounding the 84.00 region. The pair was valued at 85.81 when it closed deals on Monday.
Members of the Monetary Policy Board of the Reserve Bank of Australia felt that the country’s economy remained sluggish enough to warrant continued stimulus, minutes from the board’s September meeting showed.
Lower resource exports were weighing on the Australian economy, the board said, although the weakening Australian dollar is expected to help spur growth in the coming months.
Looking ahead, U.K. CPI and PPI for August and DCLG house prices for July, German and Eurozone ZEW economic sentiment index for September and Eurozone trade data for July and employment for the second quarter are set for release in the European session.
U.S. retail sales and industrial production, both for August and business inventories for July, as well as Canada existing home sales for August are to be released in the New York session.
The material has been provided by InstaForex Company – www.instaforex.com