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Forex - Yen weakens after BoJ minutes show minority dissent

Published 05/25/2014, 08:48 PM
Updated 05/25/2014, 08:50 PM
Japenese yen weaker in Asia
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Investing.com - The Japanese yen weakened against the dollar after the minutes of the April 30 board meeting released on Monday showed continued minority dissent over growth and inflation views.

Three of the Bank of Japan's nine board members wanted to separately revise growth and inflation outlooks, including emphasizing downside risks and setting a timeframe for easing, minutes showed.

Takahide Kiuchi and Takehiro Sato repeated objections to the outlook that inflation will be raised to and anchored around 2% in 2015.

Sato said that inflation "is likely to follow a rising trend again from the second half of this fiscal year."

Kiuchi continued to propose that the BOJ should maintain the high degree of easing only during the two-year period from April 2013. His views were rejected by the majority.

Sayuri Shirai disagreed on the timing for reaching the 2% target and proposed that the target would be achieved "toward the end of the projection period through March 2017." Her proposal was rejected by the majority.

USD/JPY traded at 102.04, up 0.07%, after the minutes, while AUD/USD held at 0.9236, up 0.05%.

Last week, the euro fell to three-month lows against the dollar and hit the lowest level in 17 months against the pound after weak German business sentiment data underlined expectations that the European Central Bank will ease monetary policy at its next meeting in June.

Recent comments by senior ECB officials have signaled that the bank is open to acting as soon as June to stop inflation in the currency bloc from falling too low.

On Thursday, ECB Governing Council member Jens Weidmann said the bank is prepared to take unconventional measures to counter the risks of low inflation in the euro zone.

The dollar was boosted after data on new home sales added to signs of a recovery in the housing market.

The Commerce Department reported that sales of new homes rose by a larger-than-expected 6.4% to 433,000 in April, after two months of decline. Analysts had been expecting a figure of 425,000. March's number was revised up from 384,000 to 407,000.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.07% at 80.48.

In the coming week, markets in the U.K. will be closed for a public holiday on Monday, while U.S. markets will also be closed for the Memorial Day holiday. Investors will be looking ahead to revised data on U.S. first quarter growth, while Tuesday’s report on consumer confidence will also be in focus.

On Monday, the Bank of Japan is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.

ECB President Mario Draghi is to speak at an event in Portugal; his comments will be closely watched.

Markets in the U.K. are to remain closed for a public holiday, while U.S. markets will also be closed, for the Memorial Day holiday.

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