The Japanese yen rallied on Thursday as investors expected the Bank of Japan to discuss the effects of its monetary policy. On the other hand, the U.S. dollar plunged to a seven-month low versus the Euro. The traders are waiting for the U.S. inflation data, which is due later in the day.
During this session, the yen surged forward by 1.3%, hitting a high of 130.80 per USD. According to a new report, the BOJ plans to review the side effects of its monetary easing at a policy meeting scheduled for next week. The central bank might make some changes. It already tweaked its policy in December, surprising the markets.
Chris Turner, the global head of markets at ING in London, noted that the report highlights the fact that the potential outcome of the next week’s BOJ meeting could be a policy change. He also added that even the normalization of monetary policy would be a huge step for Japan, considering that it has kept its interest rates lower since the coronavirus pandemic. If that happens, the Japanese Yen will likely surge higher.
Meanwhile, the greenback continued trading near its seven-month low of 102.93 hit earlier in the week. The U.S. dollar index plummeted by 0.06% to 103.04 at last, ahead of the release of CPI data. The latter could give insight into how quickly price pressures are easing in the United States. That will impact the Fed’s rate-hike policy.
IG Financial analyst Axel Rudolph noted that there is an upside risk to the greenback in the near term, given that the greenback has been heavily sold off since Friday’s non-farm payrolls report.
The common currency exchanged hands at $1.0763 on Thursday. It changes insignificantly after skyrocketing to a seven-month high of $1.07765 in the previous session. The British Pound also added 0.1% to $1.2160. European Central Bank officials’ hawkish comments are supporting the Euro. ING’s Turner said he expects another 125 basis points of rate increases from the ECB.
On the other hand, the Australian dollar declined by 0.1% to $0.6901 today. The New Zealand dollar also dropped by 0.2% to $0.6356.
However, China’s offshore yuan traded at 6.7609 per USD at last. The currency jumped to a five-month high of 6.7505 per dollar earlier in the session.
At the same time, emerging market currencies continued trading in the green against the dollar. The index for EM currencies climbed up by 0.3%. In Egypt, the Pound plummeted by 3% to 30.6 versus the greenback, though.
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