The yen held steady against the dollar today despite the news that the Bank of Japan wouldn’t roll out another stimulus as most traders had expected.
The dollar was 0.2 percent lower at 102.42 yen. The Japanese currency also remained firm against the euro, which plunged 0.2 percent to 141.41 yen, down from 142.47 yen, its strongest level in three weeks. The euro advanced 0.1 percent against the dollar to $1.3806
Most traders attributed the dollar’s decline to end-month inflows by Japanese firms. The U.S. currency was already lower before the BOJ disclosed its latest policy decision.
The Bank of Japan’s Governor Haruhiko Kuroda has tempered market expectations of an immediate rollout of a monetary easing program after he recently insisted that Japan’s inflation is still on track to hit his target of 2 percent. The BOJ retained its promise of boosting base money, an important measure, at a yearly pace of 60 trillion-70 trillion yen ($587-685 billion).
The euro seems to be propped up by increasing investor inflows into European stock and bond markets and Germany’s huge current account surplus.
“Every trader I know in London seems to be calling for a weaker euro. You can’t find anyone who wants it higher, yet it does not want to fall,” an unnamed trader at a London bank told Reuters. “At that point you just find yourself trading off a square book and waiting for a clearer trend to re-emerge.”
Most traders expect the U.S. Federal reserve to taper its stimulus program by $10 billion on Wednesday. However, very few of them expect the Fed to announce an interest rate hike soon. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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