21 Nov 2013
Dollar gains on Japan on diverging monetary expectations
FXstreet.com (London) - The dollar has been climbing strongly against the yen on diverging central bank monetary policy expectations.
USD/JPY is up 0.80 percent and above the psychologically important JPY100 level to JPY100.8450, undoing any yen strength yesterday when a Japanese official said that reforms to the Japanese government-run pension fund could take years to carry out. The reforms had put pressure on the yen as a result of recommendations to rotate out of yen-denominated domestic bonds and into overseas investments.
This morning the Bank of Japan kept its policy unchanged and remains committed to ultra-loose monetary policy as it fights deflationary pressures. It is expected that the Japanese central bank will maintain its policies until 2015 at the earliest.
The tone of Japan’s policymakers contrasts with the US Federal Reserve, whose minutes released yesterday from the Federal Open Market Committee’s October meeting signalled that they would be prepared to taper asset purchases “in coming months” if the economy improves as projected.
The differing perceived monetary policy outlooks have pushed their yield spread to the widest in more than two months, with 2.19 percent separating Japanese and US 10-year government bonds.
USD/JPY is up 0.80 percent and above the psychologically important JPY100 level to JPY100.8450, undoing any yen strength yesterday when a Japanese official said that reforms to the Japanese government-run pension fund could take years to carry out. The reforms had put pressure on the yen as a result of recommendations to rotate out of yen-denominated domestic bonds and into overseas investments.
This morning the Bank of Japan kept its policy unchanged and remains committed to ultra-loose monetary policy as it fights deflationary pressures. It is expected that the Japanese central bank will maintain its policies until 2015 at the earliest.
The tone of Japan’s policymakers contrasts with the US Federal Reserve, whose minutes released yesterday from the Federal Open Market Committee’s October meeting signalled that they would be prepared to taper asset purchases “in coming months” if the economy improves as projected.
The differing perceived monetary policy outlooks have pushed their yield spread to the widest in more than two months, with 2.19 percent separating Japanese and US 10-year government bonds.