News Column

Dollar trades at lower 102 yen ahead of BOJ meeting

June 10, 2014

The U.S. dollar traded narrowly in the lower 102 yen zone Wednesday morning in Tokyo as market players retreated to the sidelines ahead of the Bank of Japan's policy meeting from Thursday.

At noon, the dollar fetched 102.30-33 yen compared with 102.30-40 yen in New York and 102.24-25 yen in Tokyo at 5 p.m. Tuesday.

The euro was quoted at $1.3525-3527 and 138.35-37 yen against $1.3542-3552 and 138.59-69 yen in New York and $1.3591-3592 and 138.96-139.00 yen in Tokyo late Tuesday afternoon.

An overnight rise in U.S. Treasury yields failed to spark demand for the dollar against the yen on expectations of widening interest rate gaps. The yield had been slow to bounce back from an 11-month low hit in late May.

The BOJ is widely expected to hold off on announcing further monetary stimulus at the two-day meeting amid signs of improvement in the Japanese economy.

"Expectations (for more easing) dropped after the previous CPI," said Shinichiro Kadota, foreign exchange strategist at Barclays Bank, referring to the consumer price index data that showed prices in Japan surged 3.2 percent in April from a year earlier including the effects of a 3-percentage-point tax hike.

"We've changed our previous outlook that the BOJ will ease in July to no further easing at all," Kadota said.

The euro on Wednesday continued to slip against the dollar and the yen after the European Central Bank last week announced new easing measures including a negative deposit rate.

"The euro will continue on a gradual decline leading up to the start of the TLTROs in September and December," Kadota said, referring to the ECB's new liquidity program designed to encourage banks to lend.

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Source: Japan Economic Newswire

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