The Japanese Yen was range bound against its main rival the U.S. Dollar during Tuesday’s Asian trading session as FX players waited for the Bank of Japan’s policy setting committee to hand down their latest decision. Given that inflation as reported by the Consumer Price Index remains within the BOJ’s target of 2%, most analysts don’t expect to hear of any major changes to the current ultra loose policy. However, with less than a month before the implementation of a sales tax increase goes into effect, there is some wariness that the BOJ might surprise, especially given the still fragile economic recovery as highlighted by a current account deficit which hit a record in January and a downward revision to 4th quarter GDP growth.
As reported at 11:11 a.m. (JST) in Tokyo, the USD/JPY pair was steady at 103.25 Yen while the EUR/JPY was trading at 143.28 Yen. The U.S. Dollar Index, the measure by which FX players compare the value of the greenback against several major rivals, was steady at 79.752 .DXY. The EUR/USD was trading at $1.3877 and remained close to Friday’s 2½ year high at $1.3915.
Traders Wary of PBOC Tweaks
FX traders were wary of getting too deeply into higher risk currencies like the Australian Dollar given the unsettling economic data posted over the weekend which led to some speculation that the People’s Bank of China might consider some covert measures to stimulate the flagging Chinese economy. Nonetheless, the AUD/USD pair was up about 0.1% and trading at $0.9022.