By TraderVox.com
Tradervox (Dublin) – The Japanese currency has continued with its advance against major currencies after the Bank of Japan kept on hold the prospects of another easing. This is the second week the Yen has started high against the dollar and the euro. Further, debt crisis in Europe have further weakened the euro with concerns of spread filling the market. The euro has also decreased as most wagers placed their bets on the decline of the euro. Non-Farm Payrolls and increased Jobless claims led to the decrease of the dollar last week; positive reports from the US are expected to put a hold on the yen advance.
According to Eric Viloria, a Senior Currency Strategist at Gain Capital Group LLC in New York, the neutral stand the Bank of Japan has taken has given support for the yen as speculation of easing has ceased. He indicated that the main support for the low USD/JPY is the low US yield with 10-year bonds surging below 2 percent. The yen has increased by 4.5 percent over the last month making the best performer among the top 16 currencies. The dollar increased by 0.8 while the euro dropped by 0.6 in the same period.
The Bank of Japan decided to keep the interest rate unchanged as well as its asset-purchases program. This led to an upsurge of yen demand leading to its increase before the BOJ Governor intervened saying the policy makers were willing to make powerful easing to counter deflation of the currency. There is still expectation that the BOJ will do something to ease policy but the market is testing how far BOJ is willing to go with its utterances of asset purchases.
The yen advanced by 1 percent against the euro, to trade at 105.83 yen per euro. The EUR/JPY cross had gone as low as 105.45 on April 11 last week, which is the lowest it has been since February. The yen gained against the dollar by 0.9 percent to exchange at 80.93 yen per dollar, it was at 80.57 of April 11, which is the strongest it has been in six weeks.
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