Dollar Gains Ground, Yen Weakens as BOJ Holds Dovish Stance

Bank of Japan maintains dovish tone

The central bank held its policy-setting meeting earlier this week and became the first to make a decision. It opted to maintain negative interest rates, with only slight adjustments to its policy on controlling the yield curve.

The central bank announced that it will grant a bit more freedom in its Yield Curve Control (YCC) policy, which means bond yields may surpass the 1% limit. However, this decision mostly left the markets unsatisfied as they were expecting a more forceful action from the Bank of Japan.

The price increased by 0.7% to reach 150.11, surpassing the significant 150 level once again. This has brought attention to the possibility of government intervention.

The yen was also negatively affected by poor economic data, as both and failed to meet expectations for September.

The Bank of Japan (BOJ) has predicted an increase in inflation and a decline in economic conditions for the upcoming years. It has also stated that it plans to maintain its current level of quantitative easing in the short-run.

Fed starts two-day meeting

The boost in the currency came from the yen’s decline, but it is also supported by the possibility of another interest rate increase by the Federal Reserve, as recent data indicates a strong U.S. economy.

The session will include a two-day policy meeting by the , which will end on Wednesday.

There is a strong prediction that the central bank will maintain the current interest rates, but it is also probable that they will reinforce their stance on keeping interest rates higher for an extended period of time. This situation is favorable for the dollar.

The euro is increasing slightly in value before the release of economic growth and inflation information for the eurozone.

The value of the rose slightly by 0.1% to 1.0623 before the announcement of the latest eurozone growth and inflation information. This data would provide hints about the future decisions regarding monetary policies by the European Central Bank.

The projected growth rate for the third quarter is anticipated to be only 0.2% per year, which is a decrease compared to the previous quarter’s growth rate of 0.5%. Additionally, it is predicted that prices will increase by 3.1% annually in October, which is a decrease compared to the previous month’s increase of 4.3%.

The data that was released earlier on Tuesday revealed that there was a decrease of 0.8% in September, which was unexpected considering that a rise of 0.5% was anticipated. This decline can be attributed to the impact of consistently high inflation on consumption in the largest economy of the euro zone.

Chinese PMIs disappoint

The value of rose by 0.1% to reach 7.3182 following the release of the most recent purchasing managers index data. This data indicated that China’s contracted in October, and the growth rate decreased significantly in the same period.

In other places, it fell by 0.2% to 1.2148. This happened before the Bank of England’s upcoming update, which is predicted to maintain the current interest rates.

The value of (something) decreased by 0.3% to 0.6354, while (something else) remained mostly unchanged at 0.5840.

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