Dollar Collapses Against Yen After BoJ Maintains Course and Other Top Forex News

by Joe Oliver, Forex Trading-Pips


Forex News Dollar Collapses Against Yen After BoJ Maintains Course and Other Top Forex News:

The yen strengthened against the dollar on Tuesday following falls in Japanese equities overnight after the BoJ kept monetary policy unchanged and refrained from implementing measures to ease volatility in the government bond market.

The central bank launched a massive expansion of its asset purchase program on April 4th, but the action led to sharp swings in Japanese government-bonds. Many analysts had hoped the central bank would try to address these by expanding a bank loan program to bring more liquidity into the market.

BoJ Governor Haruhiko Kuroda said “We have concluded that we don’t need to have a new tool for now as volatility has been greatly reduced amid our efforts for flexible operations’. adding “We will discuss when needed any extension to the funding limit’.

The news disappointed investors, with the dollar declining 1.78 percent to ¥96.98 during the U.S. session.

Meanwhile, the euro held on to yesterday’s gains against the dollar on continued speculation that the Fed will soon begin to taper its bond buying program. Yesterdays revised outlook by Standard & Poor’s added fuel to the taper debate after Fridays positive jobs data. EUR/USD closed up 0.12 percent at 1.3234.

More Coverage of the Day’s Top Story

  • Kathy Lien: Global ramifications of BoJ decision to deny Japan. – The Bank of Japan’s decision last night to deny Japan of additional stimulus triggered a wave of deleveraging that has driven currency and equities sharply lower. Today is perfect example of how the actions of the Japanese have global ramifications.
  • Marc Chandler: Yen rallies, dollar-bloc sinks, stocks slide –Tumultuous Tuesday. – There are two main developments in the foreign exchange market as North American participants return to their posts. First, the yen has rallied in response to the BOJ’s failure to take fresh initiatives to ensure the stability of the bond market. There had been some hope/expectation that Kuroda and Co would extend low rate funding supply operation from 1-year to 2, or possibly even 3 years. This was understood to be similar to the ECB’s LTRO. When this did not materialize, the yen began recovering from the post-US jobs slide and took the Nikkei and JGBs with it.

More Top Stories:

The Australian: Australian dollar plummets to 2010 low amid warnings over economy. – THE Australian dollar slumped to a near three-year low during Asia trade after local economic data disappointed and Goldman Sachs warned the resource-rich country was at risk of a steep economic downturn.

Dean Popplewell: Euro facing no immediate opposition. – Forget USD/JPY’s problems, China’s slowdown concern and AUD persistent depreciation from it trade association, the mighty EUR is on the grind higher looking to test some recent EUR/USD highs. Last week Draghi was unsuccessful in feeding the what EUR bears want. From an FX perspective, the ECB’s Governing Council will need to see further “deterioration” in data in order to take further steps. GBP/USD erases losses, U.K. data supports. – The pound erased losses against the U.S. dollar on Tuesday, as speculation over whether the Federal Reserve will begin to scale back its asset purchase program later this year continued to dominate market sentiment. Euro holds gains against dollar. – The euro held gains against the dollar on Tuesday as jitters over whether the Federal Reserve will taper off asset purchases later this year dominated market sentiment.

FX Street: NZD/USD collapses to yearly lows. – The NZD/USD foreign exchange rate managed to erase yesterday’s gains, plunging to depths not seen since June 2012.

Reuters: Gold futures seen falling from two-month high. – Gold futures in India are expected to fall from their two-month high hit on Tuesday, weighed down by speculations that the era of ultra-loose global monetary policy may end, along with demand concerns in the physical market.

– The Canadian dollar dropped for the first time in four days versus its U.S. counterpart as prices on crude oil, the country’s largest export, fell the most in a week along with other commodities….More at Dollar Collapses Against Yen After BoJ Maintains Course and Other Top Forex News.

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