Investing.com – The Japanese yen gained momentum against the U.S. dollar ahead of possible asset-buying and inflation target news from the Bank of Japan later today.
In Asian trading Tuesday, USD/JPY sank 0.2% to 89.44. The pair was likely to find support at 87.80, the low from Jan. 16, and resistance at 90.25, the earlier high.
While traders appear to have priced the possibility the Japanese central bank will announce additional asset-buying and a possible increase to its inflation target, it should be noted the yen has plunged about 6% in just a month due to dovish comments from newly elected Prime Minister Shinzo Abe.
In recent days, some Japanese officials have warned against allowing the yen to depreciate too rapidly against the dollar and other major currencies.
While Japanese policymakers have previously failed to engineer inflation and stem the tide of the rising yen, Japanese exporters and equity bulls have, to this point, approved of Abe’s efforts to bring radical change to the flailing Japanese economy, the world’s third-largest.
Abe has talked tough about forcing the Bank of Japan, which is independent of the government, to engage in unlimited monetary easing and raise its inflation target to 2%. The latter is widely expected to occur by the conclusion of today’s meeting. Japanese Finance Minister Taro Aso said in media interviews earlier today that a move to 2% inflation from 1% by the BoJ would represent significant progress.
Still, the yen’s downward spiral may mean the currency is oversold in the near-term. Over the past 90 days, the yen has fallen 12% in the spot market, making the worst performer among 10 major developed market currencies over that time.
Elsewhere, EUR/JPY slipped 0.17% to 119.14 while GBP/JPY fell 0.13% to 141.71. AUD/JPY rose 0.08% to 94.36 while NZD/JPY jumped 0.35% to 75.21.
In Asian trading Tuesday, USD/JPY sank 0.2% to 89.44. The pair was likely to find support at 87.80, the low from Jan. 16, and resistance at 90.25, the earlier high.
While traders appear to have priced the possibility the Japanese central bank will announce additional asset-buying and a possible increase to its inflation target, it should be noted the yen has plunged about 6% in just a month due to dovish comments from newly elected Prime Minister Shinzo Abe.
In recent days, some Japanese officials have warned against allowing the yen to depreciate too rapidly against the dollar and other major currencies.
While Japanese policymakers have previously failed to engineer inflation and stem the tide of the rising yen, Japanese exporters and equity bulls have, to this point, approved of Abe’s efforts to bring radical change to the flailing Japanese economy, the world’s third-largest.
Abe has talked tough about forcing the Bank of Japan, which is independent of the government, to engage in unlimited monetary easing and raise its inflation target to 2%. The latter is widely expected to occur by the conclusion of today’s meeting. Japanese Finance Minister Taro Aso said in media interviews earlier today that a move to 2% inflation from 1% by the BoJ would represent significant progress.
Still, the yen’s downward spiral may mean the currency is oversold in the near-term. Over the past 90 days, the yen has fallen 12% in the spot market, making the worst performer among 10 major developed market currencies over that time.
Elsewhere, EUR/JPY slipped 0.17% to 119.14 while GBP/JPY fell 0.13% to 141.71. AUD/JPY rose 0.08% to 94.36 while NZD/JPY jumped 0.35% to 75.21.