The greenback has made a big fall today as the Bank of Japan (BOJ) has stood pat on its policy rate decision. However, the Central Bank has trimmed down its outlook for inflation. The move has strengthened the Yen against the U.S. Dollar as the former rose 0.64% to 113.10 versus the latter.
In its recent statement, the BOJ has steered away from stating that it would cut interest rates further into the negative zone. Moreover, the Central Bank has also added that it would remove money reserve funds from the negative territory. Apart from this, the Central Bank appeared bit skeptical about the pace of the economic growth and projects slower growth rate than it stated in January.
It was widely expected among the market participants that the BOJ Governor, Haruhiko Kuroda, will not trim down the interest rates further. Kuroda had told time and again that he would like to see the impact of January rate cut on economic growth rather than announcing fresh rate cuts.
Eyes on Fed
According to Westpac senior currency strategist, Sean Callow, Kuroda has the tough question to answer as why the yen gained ground now more than it did before the introduction of negative interest rates.
Meanwhile, the Euro edged higher against the greenback by 0.11% to 1.1114, close to the one-month high of $1.1218. The euro grew stronger after the European Central Bank head, Mario Draghi, hinted that any further rate cut is unlikely.
After the crucial Euro and the BOJ decision, the market participants have turned their attention to the Federal Reserve’s policy meet this week. The majority of the market analysts believe that the Fed will keep the policy rates unchanged but might hint at the scope of rate hikes going forward.
Monday’s US inflation data that showed that the economy has rebounded has firmed up expectations that the Fed will have the opportunity to increase rates this year. The U.S. Dollar Index traded flat at $96.60 during the day.