By TraderVox.com
Tradervox.com (Dublin) – Japan released its trade data yesterday raising the yen to 0.6 percent from one-month high against the euro. The strong yen was also as a result of increased safe haven appetite in the market resulting from decline in Asian stocks. The yen also increased prior to Bank of Japan meeting on July 11-12.
The Bank of Japan policy makers will meet this week to discuss the monetary policy where they are expected to consider the recent ECB decision to lower interest rates. The BOJ Governor Masaaki Shirakawa has assured the market of the bank’s commitment to pursuing powerful monetary easing to achieve its one percent inflation target. So far, Bank of Japan has expanded its asset purchases program by 20 trillion yen; this is the bank’s main policy tool aimed at spurring growth in the country.
According to Citigroup Inc’s Currency Strategist Osamu Takashima, the BOJ will probably leave the policy unchanged when they meet this week. However, should the BOJ act against these expectations, the result would be a stronger yen which is against the BOJ will. On the other hand, the dollar index used by the Intercontinental Exchange inc to track the US dollar against currency of six major counterparts has slowed on its advance from last week on speculations that Federal Reserve will introduce more measures to support economic growth. The index rose by 2.1 percent in the last five days up to July 6, to reach 83.275.
Chinese data has also added to the increased demand for safe haven currencies. Consumer prices rose by 2.2 percent in June from a year earlier. However, Chinese Premier Wen Jiabao said that the government will embark on intense measures to avert the downside risk on the economy which forced the Australian dollar to decline.
The Japanese currency declined to 97.92 from 97.89 yen per euro after it had earlier touched it’s strongest in a month of 97.43 yen. Against the dollar, the Japanese currency was trading at 79.70 up from 79.66 yen per dollar.
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