Yen declined in Asian trade on Monday against a basket of major rivals, moving in a negative zone for the third session against the dollar and approaching six-week lows following the Bank of Japan’s policy meeting.
The yen is also pressured by improving US 10-year treasury yields as markets await more clues on the future of US interest rates.
The Price
The USD/JPY pair rose 0.2% today to 157.66 yen per dollar, with a session-low at 157.27.
The yen lost 0.25% on Friday, the second loss in a row, plumbing six-week lows at 158.26 after the BOJ’s policy meeting.
The yen also lost 0.45% overall last week against the dollar on concerns about the Japan-US interest rate gap.
The BOJ
As expected, the Bank of Japan voted to maintain interest rates at 0.1% and monetary policies unchanged.
The BOJ decided in March to raise short-term interest rates by 20 basis points to 0.10%, the first such rate hike since 2007.
In its update for the policy statement, the BOJ unexpectedly maintained the current plan purchasing government bonds at a pace of 6 trillion yen ($38 billion) a month.
The markets heavily expected the BOJ to announce a cut to its massive bonds purchases program this month.
However, the BOJ did say it’ll put up such a plan to reduce purchases at the July meeting.
The BOJ also removed any indications that it’ll continue to raise short-term interest rates to levels that don’t stun or overheat the market.
Nearly two thirds of the economists polled by Reuters expected the BOJ to start reducing its monthly bonds purchases this month.
The BOJ has recently started to normalize its policies at a time when most other central banks have gone a long way in tightening monetary policies to combat inflation, and now have moved on to rate cuts.
US Yields
US 10-year treasury yields rose 0.6% on Monday away from 10-week lows at 4.190%, underpinning the dollar.
Fed Minneapolis Chair Neil Kashkari said the expected move would be a single interest rate cut by the Federal Reserve this year, likely in December.
Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
