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Yen Modifies Bit as BOJ Holds, Spotlight Moves to Fed Meeting

The yen was little modified against the greenback on Tuesday, trading near a three-week low after the Bank of Japan left monetary policy on hold as anticipated, and as traders cut expectations for aggressive rate cuts from the U.S. Federal Reserve.

The BOJ left its massive asset-purchase plan, and forward guidance maintained at a monetary policy meeting on Tuesday. Governor Haruhiko Kuroda could provide further clues on coverage at a press conference from 0630 GMT.

Against a box of six leading currencies, the greenback traded close to a two-month high.

The Fed is predicted to cut rates by 25 basis points Wednesday, and buyers are awaiting whether the shift may be a one-off or the first in a series of various cuts, as many investors are anticipating.

The pound hit a new 28-month low early in Asia trade as traders became more and more nervous about the prospects of a no-deal Brexit under late British PM Boris Johnson.

Monetary policy is prone to set the tone for currency markets in upcoming months as central banks from Australia, New Zealand, Europe and probably Britain are anticipated to cut rates as a consequence of low inflation and risks to world financial growth.

The yen JPY=EBS was quoted at 108.740 per greenback, little modified on the day. The yen dropped to a three-week low of 108.950 early in Asian trading.

The Japanese currency trimmed its losses and edged a tad higher against the greenback after the BOJ’s decision; however, the shift quickly faded.

The BOJ, as anticipated, maintained a pledge to guide short-interval rates of interest at -0.1% and the 10-year bond yield around 0% through aggressive bond investments.

The BOJ further stated it would improve stimulus “without hesitation” if needed; however, investors have repeatedly said that in contrast with other leading central banks, the BOJ has limited options in hands.

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Nina Sanders

Nina is the lead of the Currency column. She had joined the group as a part-time writer in 2006, covering the stock market, startups, earnings, and economy. Nina completed her Bachelors of Arts degree from the University of California specializing in Journalism and Geography.

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