Despite efforts and rhetoric from the Bank of Japan as well as investors’ concerns over another possible intervention, the Japanese Yen continued to rise broadly. The Yen moved well away from recently struck troughs against both the Euro and the US Dollar, although the BOJ policy decision is due out later this week. The Yen experienced a 2.1% loss versus the Dollar last Friday on consideration that the BOJ might apply negative interest rates to the BOJ lending program. The BOJ’s 2-day meeting culminates on Thursday and analysts predict that the BOJ will provide more easing in yet another attempt to discourage investment in the Yen.
As reported at 10:37 am (BST) in London, the USD/JPY pair was trading at 110.7750 Yen, down 0.41%; the pair’s daily low was 110.6750 Yen while the session peak was at 111.2995 Yen. The EUR/JPY is also lower at 125.0300 Yen, down 0.23% in a daily range of 124.6937 Yen to 125.4038 Yen.
BOJ Policy Decision Could Surprise
Although the consensus is expecting the BOJ to act, some FX strategists warn that the BOJ could surprise. They point out that with the USD/JPY pair holding above the 110 Yen level and given that the Nikkei is stabilizing, the BOJ could disappoint in favor of waiting until the next policy meeting. On the other hand, the BOJ’s 2% inflation target hasn’t yet been reached and the central bank governor could use that as the argument for more easing. March inflation figures are due out tomorrow and are expected to remain in negative territory.