Pound soared against U.S. Dollar and Euro. What about Yen?

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Pound soared against U.S. Dollar and Euro. What about Yen?

The major currencies fluctuated on Monday. The sterling traded at 87.20 pence against the euro. It jumped against the dollar and the euro due to the reports that Britain may ease its lockdown this week. Moreover, Prime Minister Boris Johnson is also returning to work after recovering from the COVID-19 infection.

Meanwhile, an EU meeting continues. Some investors are concerned that the ECB will extend its debt purchases to include junk bonds. According to them, such a decision could widen rifts between members of the European Union.

Some Asian currencies also ended Monday in the green. The New Zealand dollar climbed up by 0.85% to $0.6070, while the Australian dollar rose by 1% to $0.6462. However, the Japanese yen gained the most.

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What caused the Japanese Yen’s rise?

The yen jumped on Monday after the Bank of Japan extended a stimulus to help companies hit by the pandemic. The yen rose to 107.28 per dollar. It traded at 116.36 against the euro, close to its strongest in three years versus the common currency.

The BOJ issued that it would increase purchases of commercial paper and corporate bonds as companies struggle with lost revenue. The traders expected the BOJ’s decision to extend corporate debt buying and remove limits on its government bond purchases. Major central banks worldwide have also released unprecedented amounts of monetary support to fight the crisis.

It will be challenging for markets to latch onto the BOJ as it has already reached the limit of what it can do – noted Takuya Kanda, general manager at Gaitame.com Research Institute in Tokyo. He also added that it’s hard to differentiate from one currency to the next because every economy is suffering. And major central banks have eased policy a lot already.

However, the traders currently shifted their focus to a U.S. Federal Reserve meeting, which is ending Wednesday. And there is also a European Central Bank meeting scheduled on Thursday. Both of them will influence the forex market in the coming days.

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