Yen Halts Losses after Central Bank Retains Stimulus Plan

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Yen Halts Losses after Central Bank Retains Stimulus PlanThe yen rallied, ending a four-day losing streak after the Bank of Japan retained its record stimulus, which had pushed the currency lower when it was increased last October.

The Japan’s currency rose 1.3 percent to trade at 117.26 per dollar as of 8:21 a.m. in New York. It surged 0.9 percent to 135.99 against the euro. The euro advanced 0.4 percent to trade at $1.597.

“They revised down the CPI forecast, so the actions and the language seem rather inconsistent,” Jeremy Stretch, a London-based head of foreign-exchange strategy at Canadian Imperial Bank of Commerce, told Bloomberg News, referring to the Bank of Japan. “Some people were a little disappointed that there was no change. For me, the dip in dollar-yen provides a better level to go back in again.”

The central bank retained its program of expanding the monetary base to 80 trillion yen ($682 billion) annually. It also lowered its inflation estimate for the financial year that begins in April to 1 percent, down from the previous forecast of 1.7 percent.

Some analysts believe the yen advanced after the BOJ’s move caught some investors who had expected an increase in the stimulus program flatfooted. The yen tumbled 2.8 percent on Oct. 31, when the BOJ unexpectedly boosted the monetary stimulus to the present level, and touched 121.85 per dollar last month, the lowest level since July 2007.

Meanwhile, the pound fell as investors registered their disappointment with the decision by two Bank of England officials to abandon the push for higher interest rates, as shown in the central bank’s minutes. The sterling declined 0.6 percent to trade at 76.73 pence per euro, down from a high of 75.96 pence per euro that it hit on Jan. 16, its highest level since February 2008. The pound dropped 0.2 percent to $1.5110. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com
 

 

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.