Yen tumbles with BOJ on hold; dollar rises
Volume was thinner than normal, as many international markets were closed on Thursday for the May Day holiday.
The Japanese currency dropped to a four-week low against the dollar, which rose 1.7% to 145.45 yen. Against the euro, the yen dropped to a one-month low, with the single currency last up 1.2% at 164.02 yen.
The BOJ's decision to hold interest rates was unanimous and anticipated, but investors saw the downgraded outlook as reducing the likelihood of future hikes. It now expects underlying consumer inflation to reach its 2% target around the latter half of fiscal 2026 and onward, pushing back the timing by a year from its previous projection in January.
'People have been banking on the BOJ hiking interest rates, but those expectations have moderated now that the BOJ has revised their growth and inflation forecast lower,' said Jayati Bharadwaj, global FX strategist at TD Securities in New York.
The dollar, on the other hand, rose against major currencies such as the euro and sterling, due in part to expectations of deals with many of the country's trading partners including China. Those deals could soften the blow of US tariffs on most goods.
US Trade Representative Jamieson Greer had said on Wednesday that no official talks were happening with China.
The euro fell to a three-week trough versus the greenback and was last down 0.5% at $1.1273. Sterling also fell, down 0.3% at $1.3293.
'We have been flagging that the dollar has potential to bounce back in the near term, which could potentially give better entry levels to sell it again,' said TD's Bharadwaj.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
2 hours ago
- Business Recorder
New Zealand dollar falls as benign inflation boosts rate cut bets
SYDNEY: The New Zealand dollar slipped on Monday while local bonds rallied after inflation data proved not as bad as feared, with still tepid domestic price pressures adding to the case for a cut in interest rates next month. The kiwi dollar fell 0.3% to $0.5941, having lost 0.8% last week to mark a third consecutive week of declines. It is now off almost 3% from a nine-month peak of $0.6120, with near-term support now at last week's low of $0.5906. Data on Monday showed New Zealand's inflation picked up to an annual rate of 2.7% in the second quarter, the highest level in a year, thanks to higher food, electricity and streaming services prices. However, that came under the forecast of 2.8%. Non-tradable inflation, mostly domestically generated price pressures, continued to slow to 3.7% from 4% previously. 'CPI inflation has failed to significantly increase, providing the (Reserve Bank of New Zealand's Monetary Policy Committee) with reason not to expect a return of yearly CPI back to the top of the target band (of 1-3%) this year,' said Citi analysts in a note to clients. 'This would allow the MPC to re-start the easing cycle at the August 20 meeting.' Two-year swap rates duly fell 6 basis points to 3.115%, the lowest since mid-May. Ten-year government bond yields dropped 4 bps to 4.595%. Markets are now pricing in a 75% probability the RBNZ will cut by 25 basis points in August, up from a 61% chance ahead of the data. The Aussie, on the other hand, was flat at $0.6510 , having lost 1% last week to as low as $0.6455. It is finding some support at 65 cents. Against the Japanese yen, it slipped 0.3% to 96.61 yen as the Japanese currency bounced a little after the ruling coalition lost control of the upper house in an election on Sunday, a result that has been well flagged by polls. Looking ahead, the Reserve Bank of Australia will release the minutes of its July policy meeting where it may offer some insights into a rare split among policymakers before deciding to hold rates steady at 3.85%. A surprisingly soft jobs report last week has seen markets move to price a 90% chance that the RBA will cut rates in August. Governor Michele Bullock is due to give a speech at an annual fundraising lunch at the Anika Foundation on Thursday. Across the Tasman Sea, RBNZ Chief Economist Paul Conway will be speaking about the economic effects of tariffs in New Zealand on Thursday at 11:30am local time.
Business Recorder
3 hours ago
- Business Recorder
Japan PM Ishiba vows to stay in office to deal with US tariff talks
TOKYO: Japanese Prime Minister Shigeru Ishiba said on Monday he needed to continue in office to deal with trade tariff negotiations with the United States and other economic issues following a bruising defeat in upper house elections.
Business Recorder
3 hours ago
- Business Recorder
Stocks surge, KSE-100 gains over 500 points
Positive sentiments returned to the Pakistan Stock Exchange (PSX), with the benchmark KSE-100 Index gaining over 500 points during the opening hours of trading on Monday. At 10:10am, the benchmark index was hovering at 139,101.66 level, an increase of 504.30 points or 0.36%. Buying was observed in key sectors including automobile assemblers, commercial banks, oil and gas exploration companies, OMCs and fertilizer. Index-heavy stocks, including EFERT, MCB, MEBL, NBP, PPL, and POL, are traded in green. During the previous week, the Pakistan Stock Exchange (PSX) closed on a historic high, buoyed by a blend of investor optimism, strong macroeconomic data, and anticipation of robust corporate earnings. The benchmark KSE-100 Index surged to an all-time closing level of 138,597 points, marking a weekly gain of 3.2%, or 4,297 points—the highest ever in its trading history. Analysts noted that the sentiment on the trading floor was distinctly optimistic, despite foreign institutional selling and the usual summer lull in investor activity. Internationally, Asian shares and the yen held their ground on Monday as Japanese elections proved bad for the government but no worse than already priced in, while Wall Street futures braced for earnings from the first of the tech giants. Investors were also hoping for some progress in trade talks ahead of President Donald Trump's August 1 tariff deadline, with US Commerce Secretary Howard Lutnick still confident a deal could be reached with the European Union. There were reports Trump and Chinese leader Xi Jinping were closer to arranging a meeting, though likely not until October at the earliest. In Japan, the ruling coalition lost control of the upper house in an election on Sunday, further weakening Prime Minister Shigeru Ishiba's grip on power as a tariff deadline looms. Ishiba expressed his intention to stay in the position, which along with a market holiday, limited the reaction and the yen was 0.4% firmer at 148.29 to the dollar. This is an intra-day update
