On Thursday, the yen remained under pressure, hovering around 155 per dollar as the Bank of Japan commenced its two-day rate-setting meeting. Traders were apprehensive about potential intervention by Tokyo while policy discussions were ongoing.
After trading within a narrow range for several days, the dollar finally surpassed the 155 yen threshold for the first time since 1990 in the previous session and held steady at 155.34 yen in early Asia trading.
Speculation about Japanese authorities intervening to strengthen the yen had hindered the dollar's rise toward the psychologically significant level, which some market participants viewed as a trigger for action from Tokyo.
The breach of the 155 yen mark coincided with the BOJ's monetary policy meeting, although expectations leaned towards the central bank maintaining its short-term interest rate target unchanged after last month's significant move away from negative rates.
"We anticipate a slightly hawkish stance from the BOJ meeting," said Carl Ang, a fixed income research analyst at MFS Investment Management. "It appears premature for the BOJ to deviate from its March communication indicating continued accommodative financial conditions."
Anticipated gradual policy tightening and a persistently low terminal policy rate pose challenges for a substantial yen appreciation, even at historically low levels.
BOJ Governor Kazuo Ueda remarked this week that the central bank would consider raising interest rates further if trend inflation progresses toward its 2% target, as anticipated.
In broader markets, the dollar regained ground, recovering from a minor dip earlier in the week following positive business activity data from the euro zone and the UK, which had bolstered the euro and sterling.
The euro was marginally higher at $1.0702, stepping back slightly from its over one-week peak reached on Wednesday, while sterling was unchanged at $1.2463.
The dollar stabilized at 105.79 against a basket of currencies, rebounding from nearly a two-week low recorded in the previous session.
Trading in Asia was subdued as Australia observed a holiday.
The Australian dollar inched up to $0.6500, supported by diminishing expectations of rate cuts from the Reserve Bank of Australia (RBA) this year after the country's first-quarter consumer price inflation decelerated less than anticipated.
"Inflationary pressures are easing, but the RBA may need more evidence before being confident about a return to the 2–3% target range within the expected timeframe," said Justin Smirk, senior economist at Westpac. "Consequently, we anticipate the RBA to maintain its current stance in May, and we've pushed back our projection for the first rate cut to November, previously September."
The New Zealand dollar advanced to $0.5940, gaining 0.08%.
Paraphrasing text from "Investing" all rights reserved by the original author.
