The U.S. dollar rose against the yen on Thursday, after the Bank of Japan announced a massive program of relaxation intended to end deflation in the Japanese economy.
The 0.01% U.S.Dollar JPY 96.16 yen Japanese shot Thursday from 92.90 yen, just ahead of the BOJ's decision. It traded around 92.78 yen in the North American trade late Wednesday.
Japanese Relaxation excites Asia
Asian markets rose after the Bank of Japan announced plans aggressive fight against deflation. The WSJ Phred Dvorak says Michael Arnold how other countries are reacting to the new route from Japan.
In the first policy meeting under Gov. Haruhiko Kuroda, who has vowed to fight against long-term deflation in Japan, the central bank pledged to achieve an inflation target of 2% in two years. Also made a radical revision of the policy with a new goal of monetary base and a sharp increase in asset purchases.
"There are two reasons why the dollar-yen might have gone higher: Positioning or the Bank of Japan surprised the market by being more aggressive. Think it's more likely the former than the latter," said David Woo , head of global rates and currencies research at Bank of America Merrill Lynch.
"Not so much that surprised the market by being more aggressive, but the market and reduce short yen positions and had to buy again today," Woo said, referring to Kuroda.
"A first look at the market reaction confirms that the BoJ delivered at least what the market expected: dollar / yen and Nikkei gaining higher after the announcement," Danske Bank analysts in a note. The Nikkei JP: NIK 2.20% was recovered 2.2%.
The ICE dollar index DXY 0.04%, which measures the U.S. currency against a basket of six major rivals, fell to 82,637 from 83,035 at the beginning of the session and 82,712 on Wednesday.
The WSJ Dollar Index XX: BUXX 0.06%, which measures the greenback against a larger basket, pared gains to trade at 73.53, compared to 73.78 and 73.22 in Wednesday's session.
Euro Rallies
The euro JPY -0.02% rose more than 4% to 124.47 yen Japanese.
The euro rebounded against the U.S. dollar. The EUR USD -0.07% rose to $ 1.2946 in recent action, down from $ 1.2858 earlier in the session, and $ 1.2845 on Wednesday.
The decision comes as the European Central Bank monetary policy remained unchanged.ECB President Mario Draghi told reporters at his monthly press conference that the central bank would watch closely the incoming data and assess the risks of the bank's target for the annual inflation close to but just below 2%.
"In short, a rate cut or additional unconventional measures can not be ruled out in May," said Annalisa Piazza, a strategist at New edge brokerage in London. Annual inflation in the euro area fell to 1.7% in March.
However, the euro rebounded in the afternoon after Draghi did not explain specifically a greater reward in the future.
The labor market data has been weaker than expected this week, including the U.S. weekly jobless claims on Thursday and ADP data private payrolls Wednesday. Data culminate with Friday's jobs report as investors analyze the headline non farm payroll number and the rate of unemployment for clues about the Fed could start declining asset purchases.
The Fed has been linked to the duration of the $ 85 billion monthly asset purchases to a fall in the unemployment rate to 6.5%. "If we have a disappointment, with negative consequences for the dollar. Likely that the stimulus would take more time,".
In London, the Bank of England kept its bond purchase program unchanged and maintained its key interest rate at a record low of 0.5%, as expected.
The British pound GBPUSD -0.06% rose to $ 1.5244 from $ 1.5148 late Wednesday.
The 0.01% U.S.Dollar JPY 96.16 yen Japanese shot Thursday from 92.90 yen, just ahead of the BOJ's decision. It traded around 92.78 yen in the North American trade late Wednesday.
Japanese Relaxation excites Asia
Asian markets rose after the Bank of Japan announced plans aggressive fight against deflation. The WSJ Phred Dvorak says Michael Arnold how other countries are reacting to the new route from Japan.
In the first policy meeting under Gov. Haruhiko Kuroda, who has vowed to fight against long-term deflation in Japan, the central bank pledged to achieve an inflation target of 2% in two years. Also made a radical revision of the policy with a new goal of monetary base and a sharp increase in asset purchases.
The central bank said it would increase its holdings of Japanese government bonds at an annual rate of
¥50
trillion ($530 billion), with JGB holdings double in two years.
"There are two reasons why the dollar-yen might have gone higher: Positioning or the Bank of Japan surprised the market by being more aggressive. Think it's more likely the former than the latter," said David Woo , head of global rates and currencies research at Bank of America Merrill Lynch.
"Not so much that surprised the market by being more aggressive, but the market and reduce short yen positions and had to buy again today," Woo said, referring to Kuroda.
"A first look at the market reaction confirms that the BoJ delivered at least what the market expected: dollar / yen and Nikkei gaining higher after the announcement," Danske Bank analysts in a note. The Nikkei JP: NIK 2.20% was recovered 2.2%.
The ICE dollar index DXY 0.04%, which measures the U.S. currency against a basket of six major rivals, fell to 82,637 from 83,035 at the beginning of the session and 82,712 on Wednesday.
The WSJ Dollar Index XX: BUXX 0.06%, which measures the greenback against a larger basket, pared gains to trade at 73.53, compared to 73.78 and 73.22 in Wednesday's session.
Euro Rallies
The euro JPY -0.02% rose more than 4% to 124.47 yen Japanese.
The euro rebounded against the U.S. dollar. The EUR USD -0.07% rose to $ 1.2946 in recent action, down from $ 1.2858 earlier in the session, and $ 1.2845 on Wednesday.
The decision comes as the European Central Bank monetary policy remained unchanged.ECB President Mario Draghi told reporters at his monthly press conference that the central bank would watch closely the incoming data and assess the risks of the bank's target for the annual inflation close to but just below 2%.
"In short, a rate cut or additional unconventional measures can not be ruled out in May," said Annalisa Piazza, a strategist at New edge brokerage in London. Annual inflation in the euro area fell to 1.7% in March.
However, the euro rebounded in the afternoon after Draghi did not explain specifically a greater reward in the future.
The labor market data has been weaker than expected this week, including the U.S. weekly jobless claims on Thursday and ADP data private payrolls Wednesday. Data culminate with Friday's jobs report as investors analyze the headline non farm payroll number and the rate of unemployment for clues about the Fed could start declining asset purchases.
The Fed has been linked to the duration of the $ 85 billion monthly asset purchases to a fall in the unemployment rate to 6.5%. "If we have a disappointment, with negative consequences for the dollar. Likely that the stimulus would take more time,".
In London, the Bank of England kept its bond purchase program unchanged and maintained its key interest rate at a record low of 0.5%, as expected.
The British pound GBPUSD -0.06% rose to $ 1.5244 from $ 1.5148 late Wednesday.
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