Investors Wary of Policy Decisions

Two of the world’s major central banks are poised to announce their monetary policy decisions later today and investors are wary of the respective currencies’ movement in the moments which will follow the news.

As reported at 12:11 p.m. (JST) in Tokyo, the Japanese Yen held near to a recently struck 1-month peak versus the greenback with the USD/JPY pair trading lower at 92.93 Yen, not far from Tuesday’s 1-month high of 92.57 Yen but well off the multi-year peak of 96.71 Yen which had been set earlier last month. The Bank of Japan’s policy setting committee is expected to announce further measures which will tackle the country’s prolonged period of deflation but there is some ambivalence as to the extent to which they might move; analysts say that the central bank has a history of falling short of expectations so it is doubtful that they will be able to surprise markets.

The European Central Bank is also poised to deliver its monetary policy announcement, as is the Bank of England’s MPC. The majority of analysts polled don’t expect any major changes to current policy though there is some speculation that the ECB might try to assuage investors’ fears in the wake of the Cyprus bailout deal which shook the banking sector to the core with taxes for larger depositors; many investors are fearful that similar plans will be included in future Eurozone area bailouts.