Asian Session – Dollar well supported as Bank of Japan keeps easy policy
January 22, 2014 7:58 am
The dollar was well supported during today’s Asian trading but there was some volatility with respect to yen crosses following the announcement from the Bank of Japan.
The Bank of Japan kept its policy unchanged and gave no hints about further loosening, which might have disappointed some market participants who were hoping for promises of extra easing. The BOJ retained its forecast that core inflation would hit 1.9% during the fiscal year that starts in April 2015. Aided by the weaker yen, headline inflation rose to 1.2% during November of 2013. In the near-term, the Bank saw inflation moving between 1.0 and 1.5%.
Some analysts are skeptical whether the BOJ can achieve the 2% inflation target without additional easing as the Japanese economy will slow down following the April sales tax hike, wages are not rising and the effect of the weak yen on inflation may wane if the currency stops falling.
The dollar was up 0.12% during the session, trading at 104.43. The dollar briefly dipped below 104 at 103.95 after the BOJ announcement but rebounded afterwards.
The euro was down slightly against the dollar, retreating 0.04% to 1.3554. The euro was up 0.11% against the Japanese yen at 141.55.
The surprise of the day came from Australia, where inflation for the fourth quarter surpassed expectations. The year-on-year change in Australian consumer prices came out at 2.7% versus 2.5% expected by economists. During the third quarter inflation was at 2.2%.
The news about the faster-than-expected inflation dispelled any thoughts that the Reserve Bank of Australia may soon cut the key interest from its current level of 2.50%. As a result, the aussie, which has been heavily shorted lately, bounced back to gain 0.66% against the US dollar to trade at 0.8863.
The market’s attention will focus on the release of the UK employment report as well as the minutes from the Bank of England meeting, during the European Session. Sterling was little changed against the dollar during the Asian session, in anticipation of the data. However, after the Australian dollar, the pound was the second best performing major currency during the previous 24 hours with an overall gain of around 0.20%.
Weekly mortgage market data will be released in the United States as well as weekly chain store sales.
The dollar was well supported during today’s Asian trading but there was some volatility with respect to yen crosses following the announcement from the Bank of Japan.
The Bank of Japan kept its policy unchanged and gave no hints about further loosening, which might have disappointed some market participants who were hoping for promises of extra easing. The BOJ retained its forecast that core inflation would hit 1.9% during the fiscal year that starts in April 2015. Aided by the weaker yen, headline inflation rose to 1.2% during November of 2013. In the near-term, the Bank saw inflation moving between 1.0 and 1.5%.
Some analysts are skeptical whether the BOJ can achieve the 2% inflation target without additional easing as the Japanese economy will slow down following the April sales tax hike, wages are not rising and the effect of the weak yen on inflation may wane if the currency stops falling.
The dollar was up 0.12% during the session, trading at 104.43. The dollar briefly dipped below 104 at 103.95 after the BOJ announcement but rebounded afterwards.
The euro was down slightly against the dollar, retreating 0.04% to 1.3554. The euro was up 0.11% against the Japanese yen at 141.55.
The surprise of the day came from Australia, where inflation for the fourth quarter surpassed expectations. The year-on-year change in Australian consumer prices came out at 2.7% versus 2.5% expected by economists. During the third quarter inflation was at 2.2%.
The news about the faster-than-expected inflation dispelled any thoughts that the Reserve Bank of Australia may soon cut the key interest from its current level of 2.50%. As a result, the aussie, which has been heavily shorted lately, bounced back to gain 0.66% against the US dollar to trade at 0.8863.
The market’s attention will focus on the release of the UK employment report as well as the minutes from the Bank of England meeting, during the European Session. Sterling was little changed against the dollar during the Asian session, in anticipation of the data. However, after the Australian dollar, the pound was the second best performing major currency during the previous 24 hours with an overall gain of around 0.20%.
Weekly mortgage market data will be released in the United States as well as weekly chain store sales.
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