Dollar Steady Against Yen As BOJ Stands Pat On Policy

The dollar remained steady against the yen during Asian trading Tuesday after the Bank of Japan stood pat on policy following its two-day meeting.

Market participants will now be focusing on BOJ Gov. Haruhiko Kuroda’s news conference from 0630 GMT and Federal Reserve chairwoman Janet Yellen’s testimony later in the global day.

The BOJ slightly cut its growth outlook in a new projection, but kept its policy on hold and maintained a bullish consumer-price forecast, suggesting officials feel little urgency to add to their aggressive stimulus measures.

“I don’t think we should be expecting any change in Mr. Kuroda’s stance at his news conference,” said Junichi Ishikawa, market analyst at IG Securities. He tipped the greenback to stay in a ¥101.20-¥101.85 range for the rest of the Asian trading day.

The dollar most recently traded at ¥101.59 from ¥101.55 late New York trading Monday.

Officials have so far played down the need for further action, saying they are on track to meet their target of 2% inflation by next year, even as Japan’s economy shows signs of stress following a national sales tax increase to 8% from 5% that took effect April 1.

Osamu Takashima, chief FX strategist at Citigroup Global Markets Japan, said the trend over the past six months was to see the dollar/yen weaken following Gov. Kuroda’s news conferences.

“Some short-term investors are looking to go long the yen on expectations Mr. Kuroda would say something optimistic” about the state of the economy, he said.

But given the rapid worsening in machinery orders data released last week, possibly signaling an economic slowdown following the April sales tax increase, Mr. Kuroda is unlikely to reiterate his optimistic views on the economy, he said.

“This time around, I think the risk is more toward a weaker yen,” he added.

He also said he doesn’t expect hawkish comments from Ms. Yellen at the congressional testimony on monetary policy and the economy, thus limiting the dollar/yen’s upside to the 200-day moving average around ¥101.90.

The euro  was at $1.3617 from $1.3619 and at  ¥138.35 from ¥138.28.

The WSJ Dollar Index , a measure of the dollar against a basket of major currencies, was up 0.033% at 72.872.

Source : Marketwatch