After a rally which pushed the US Dollar close to a 3-week peak versus the Japanese Yen, the US Dollar retreated after the news that the Bank of Japan (BOJ) said it intended to maintain the status quo even in spite of slowing inflation. Analysts had anticipated that given the BOJ’s inflation target of 2%, which it hasn’t hit in two years, expectations had been high that the central bank would inject still more liquidity into its monetary system. According to the BOJ Governor Kuroda, an increase in real wages seemed imminent and given the fact that the existing measures were working even to some small extent, the central bank would hold off on additional asset purchases.
As reported at 9:09 am (GMT) in London, the USD/JPY pair dipped to 119.80 Yen, a loss of 0.4% and moving away from yesterday’s peak of 120.45 Yen. The US Dollar Index fell by an equal 0.4% margin to trade at 97.440 .DXY, after a significant gain of 0.9% yesterday.
FOMC Minutes Loom
On the agenda for today will the Federal Reserve’s release of March’s meeting minutes which FX players will use as a better gauge of the FOMC’s intent. Janet Yellen’s recent dovish stance surprised markets who were expecting a hawkish hard line and a timeframe for the next rate increase, given the supportive economic data. If from the minutes it seems clear that the FOMC as a whole shares Ms. Yellen’s concerns it could put additional pressure on the Dollar.