Dollar Gains Against the Yen

The U.S. dollar was largely unchanged. Still, it gained against the Japanese yen after the Bank of Japan’s most recent minutes indicated that its accommodative monetary policy is likely to continue.

The dollar, which measures the dollar’s value against a basket of 6 other currencies, traded largely unchanged at 103.870, up from the low point of 103.44 reached on December 14, marked mid-June.

After falling as low as 130.5811 just over a week ago, USD/JPY increased 0.31% to 133.86, making a comeback. There had been speculation that the central bank would tighten its ultra-loose monetary policy.

However, the BOJ’s change in stance was intended to ensure the effective operation of the Japanese government bond market, not to change the course of the policy, according to policymakers’ opinions in the minutes of the December meeting.

This has hurt the Japanese yen, especially compared to the dollar, as it suggests that the ultra-accommodative policy will continue. The holiday season and a lack of faith in the BOJ’s ability to maintain this stance over the long term, particularly since Japan’s consumer inflation hit a four-decade high of 3.7% in November, have, however, kept losses in check.

With no significant euro-related data releases due in the next two weeks—at least not until the German CPI figures for December in early January—and no speakers from the European Central Bank scheduled, EUR/USD increased 0.1% to 1.0650, remaining in a narrow trading range.

The risk-sensitive AUD/USD increased 0.5% to 0.6763, while GBP/USD increased 0.2% to 1.2044, just above its low for the month of 1.1983, reached on December 22.

The USD/CNY increased 0.22% to 6.9711 on Monday because investors were encouraged by China’s announcement that it would stop requiring incoming travelers to undergo quarantine starting on January 8.

Confidence is being hurt by the rising COVID cases, which suggests that the economy will continue to be disrupted throughout the first quarter.