Kantox currency update: the BoJ sends the yen higher
The yen appreciated across the board on Tuesday, bouncing from mid-term lows after the Bank of Japan trimmed its purchases of long-term Japanese Government Bonds, which has been interpreted by the investors as the first sign of change towards a normalised monetary policy.
The euro is showing signs of exhaustion after the previous weeks’ rally and retreated from three-month highs, despite the release of bright Eurozone economic sentiment figures, which has helped the dollar to pare previous losses in absence of key macroeconomic events.
EUR/USD retreats below 1.2000. Euro rally from 1.1700 lows on mid-December, has failed to extend beyond key resistance at 1.2100 area (3-year highs), and the pair has retreated over the last sessions, returning to levels sub-1.2000. At London market opening times, the EUR/USD is trading at 1.1960.
GBP/upside capped below 1.3600. The pound ticked up on Tuesday, after May announced the remodelling of her cabinet, although the pair remains trapped within a range between 1.3500 and 1.3600, where it has been the last five days. At London market opening times, the GBP/USD is trading at 1.3550.
USD/JPY dives to 112.50 after BoJ trims bonds purchases. Dollar rally from 112.00 has been capped at 113.40 highs, and the dollar dropped about 100 pips, hitting intra-day lows at 112.50 after the BoJ’s move to reduce its purchases of Japanese Bonds, raising speculation about the exit of its massive stimulus programme. At London market opening times, the USD/JPY is trading at 112.15.
In the Calendar Today
Today, we will have a light economic calendar. Among a string of low relevance indicators, Federal Reserve committee member Kashkari’s comments about U.S. economy and the Fed’s monetary policy might have some impact on the dollar.
15:00 GMT FED Kashkari’s speech