Yen on the Rise After BOJ Easing Policy Decision

By TraderVox.com

Tradervox (Dublin) – The Bank of Japan has moved to dispel speculations of an additional stimulus which had led to the Nation’s currency decline since the week started. The Asian stocks declined and boosted demand for safe haven currency hence increasing the demand for the yen. The dollar index also decreased the as Fed Chairman Ben Bernanke indicated that the US economy if far from complete recovery. This has increased speculations that the Fed might make the third round of quantitative easing. These sentiments first reemerged in the market after employment data showed that employers added 120k jobs against an estimate of 205k.

The south pacific dollars also declined after the decision by the BOJ to hold stimulus. They were also affected by the negative economic prospects from China showing that the country’s economy is declining. The euro almost touched a three-month low against the sterling pound which is seen as a result of negative sentiments about Spain and Italy. The data expected from Germany and ECB statements this week might change the bearish trend of the euro balancing GBP/EUR pair. Investors will also be looking at the Italy and France auctions to be held this week.

According to Minori Uchida, a Senior Analysts at Bank of Tokyo-Mitsubishi, the BOJ will have a hard time adding to monetary easing since it requires a good reason. It might get this reason if the USDJPY pair falls below the 80 level-mark. In its decision, the BOJ kept the interest rate of up to 0.1 percent and left its asset purchases fund at 30 trillion. In their meeting, the board members did not mention any monetary easing hence easing fears that the bank would embark on an additional stimulus package.

The yen strengthened against the euro by 0.6 percent to trade at 106.76. The yen rose against the dollar by 0.2 percent to trade at 81.34 yen per dollar during the London session. However, the US dollar was unaffected against the euro selling at $1.3125 per euro. The positive reports expected from the US are expected to give the greenback some strength.

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