The Yen Rises While the Dollar Remains Stable

On Thursday, the yen increased as traders anticipated that the Bank of Japan would review the effects of its monetary easing. Ahead of U.S. inflation data, the dollar remained close to a seven-month low against the euro.

At its policy meeting next week, the BOJ will discuss the effects of its monetary easing and may take further action to address yield curve distortions. In Asian trade, the Japanese yen increased by as much as 0.8% to a session high of 131.36 per dollar. The yen last traded for $1.17 per dollar. The announcement comes after the BOJ’s unexpected adjustment to its bond yield control in December, which fell short of addressing bond market distortions brought on by the central bank’s massive purchases.

In other news, the dollar was slightly higher ahead of closely watched U.S. inflation data, which could clarify how quickly price pressures in the world’s largest economy are easing and the impact on the Federal Reserve’s rate-hike path.

DXY and Other Currencies

The U.S. dollar index rose 0.1% to 103.25, not far from its seven-month low of 102.93 set earlier this week.

Last Friday’s sub-50 ISM services data add to recessionary fears, supporting the soft dollar backdrop in which the Fed could ease policy later this year.

The pound fell 0.1% to $1.2140, while the euro fell 0.1% to $1.0747 after reaching a seven-month high of $1.07765 the previous session.

ECB officials’ hawkish rhetoric continues to help the euro, as four called for further rate increases on Wednesday. The Australian dollar fell 0.2% to $0.6893, while the New Zealand dollar fell 0.3% to $0.6344.

According to data released on Thursday, Australia’s trade surplus unexpectedly increased in November, exceeding expectations.

China’s offshore yuan last stood at 6.7579 per dollar, having hit a five-month high of 6.7545 per dollar earlier in the session on hopes that China’s economy is on the mend.

Meanwhile, bitcoin rose for the fifth day in a row, reaching its highest level in a month at $18,370.