By TraderVox.com
Tradervox.com (Dublin) – The Japanese currency pared its losses before the Bank of Japan policy makers conclude their meeting today. The yen strengthened against the euro as economists speculate a report from the 17-nation trading bloc will indicate that services and manufacturing contracted last month, making it the eighth month in a row. The euro also dropped against the greenback as Spain prepares to sell its bonds in tomorrow’s bond auction. The country is also seen as considering to formally request for bailout from the European Central Bank.
According to Daisuke Karakama, the Bank of Japan is likely to keep the monetary policy unchanged. Karakama is a Economist at Mizuho Corporate Bank Ltd in Tokyo. He added that the move is likely to strengthen the yen further against major currencies. The central bank had increased its asset purchases fund by 5 trillion yen in July, to make a total of 45 trillion yen in asset purchase kitty. Most economists are predicting that the policy makers will change the monetary policy by October, but very few are expecting such a move today. A Nikkei report indicated that the company thinks the bank is likely to act in today’s meeting as they consider the risks to the economy.
According to Emma Lawson, a Currency Strategist in Sydney at the National Australia Bank Ltd, the risk that prevails is that the BOJ may underwhelm the market hence causing the dollar-yen pair to go down below the support level at 78. Marito Ueda, a Tokyo-based Senior Managing Director at the FX Prime Corp predicted that the euro is likely to weaken in the long term, stating that the economic outlook for the euro zone is bleak.
The yen advanced by 0.3 percent against the euro to trade at 102.54 yen per euro at the start of trading in Tokyo today, down from its close in New York. The Japanese currency rose by 0.2 percent against the dollar to exchange at 78.66 yen per dollar.
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