Wednesday in Asia, the yen that strengthened around 11:50 pm ET pared gains shortly as investors reacted to the Bank of Japan’s decision to ease its ultra-loose monetary policy further by expanding its three-month funding operation introduced in December. The yen plunged to a 6-week low against the NZ dollar and the franc, 2-day low against the euro and the aussie and a 5-day low against the loonie and the pound.
Governor Masaaki Shirakawa and his board increased the three-month loan facility to 20 trillion yen ($222 billion), the bank said in a statement after its meeting in Tokyo. It comes after incessant pressure from the government to ease monetary conditions further so as to prevent an appreciation in the yen and a deepening of the country’s deflationary woes.
The bank again repeated its vow to fight deflation and widely retained its economic assessment.
At the end of its two-day policy meeting, the Bank of Japan’s Policy Board voted unanimously to keep the key interest rate steady at 0.1 percent. The central bank last cut its target rate for unsecured overnight call money in December 2008, lowering the rate from 0.3 percent in response to the global financial crisis.
The yen that rose to 124.12 against the euro at 11:50 pm ET Tuesday lost ground thereafter. As of now, the yen is trading at a 2-day low of 124.8 against the euro with 125.2 seen as the next downside target level. The euro-yen pair closed yesterday’s trading at 124.29.
At 1:10 am ET Wednesday, the yen fell to a 5-day low of 138.09 against the pound and a 6-week low of 86.0 against the Swiss franc, down from highs of 137.16 and 85.43, hit respectively at 11:50 pm ET Tuesday. The next downside target level for the Japanese currency is seen at 143.7 against the pound and 91.0 against the franc. At present, the yen is worth 85.91 against the franc and 137.9 against the pound, compared to yesterday’s close of 85.61 and 137.63, respectively.
The yen strengthened to 90.04 against the US dollar before losing ground at 11:50 pm ET Tuesday. Currently, the yen is worth 90.6 per dollar, compared to Tuesday’s New York session close of 90.28. If the yen weakens further, it may likely target the 91.1 level.
At 1:05 am ET Wednesday, the yen plunged to a 6-week low of 64.59 against the NZ dollar, moving from a high of 64.19 hit at 11:50 pm ET Tuesday. The kiwi-yen pair that closed yesterday’s trading at 64.12 is presently quoted at 64.52. On the downside, 68.8 is seen as the next target level for the Japanese currency.
The yen edged up to 88.87 against the Canadian dollar and 82.77 against the Aussie by about 11:50 pm ET Tuesday. The yen then declined and is currently trading at a 2-day low of 83.28 against the aussie and a 5-day low of 89.45 against the loonie, compared to yesterday’s close of 82.97 and 89.06, respectively. If the yen drops further, it may target 83.6 against the Australian currency and 89.6 against the loonie.
The U.K. jobless claims data for February, ILO unemployment rate for January, minutes from the Bank of England March meeting, Euro-zone construction output and the Italian current account-both for January are expected in the upcoming European session.
The U.S. PPI data for February has been slated for release in the New York session.