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BoJ Keeps Rates Steady - 10.4.2012

US Dollar The dollar lost some ground yesterday and extended modest losses in Asian trading hours today – the currency’s index fell in two days from 79.99 to 79.71. Yesterday the Fed president Ben Bernanke said in a conference speech that the “economy is still far from having fully recovered from the effects” of the financial crisis. Today three regional Fed banks chiefs are also scheduled to speak including Dallas Fed President Richard Fisher, Atlanta Fed President Dennis Lockhart and Minneapolis Fed President Narayana Kocherlakota. Euro The euro was flat in the morning against the majors. The single currency traded at 1.3102-1.3143 versus the greenback after touching yesterday a three-week low at 1.3033. Today investors will be closely watching German foreign trade statistics for March and France’s industrial production volumes for February. Despite the euro’s drop has somewhat stalled in the previous two days, the currency has already lost about 2% versus the dollar since the beginning of April and the support at 1.3000 may become a turning point for further downward movement. Japanese Yen Early in the morning the Bank of Japan decided to encourage the uncollateralized overnight call rate to remain at around 0%-0.1%. At the same time the Bank noted in a statement that Japan's economic activity has shown some signs of picking up, although it has remained more or less flat with annual inflation outlook at around 0%. As the economy faces a risk of deflation, the Bank “will pursue powerful monetary easing, and will support private financial institutions in their efforts to strengthen the foundations for Japan's economic growth”. In Asian trading the euro fell from 106.91 to 106.55 versus the yen and the dollar dropped from 81.55 to 81.25. Australian Dollar The pace of weakening of the Australian dollar against the US counterpart has also slowed down in the recent trading days. The currency found support at 1.0250 as inflation accelerated in China to 3.6% and the nation posted an unexpected trade balance surplus in March. Australia’s biggest trading partner reported that exports increased by 8.9% and imports rose by 5.3% from a year earlier resulting in a trade balance surplus of 5.35 billion dollars. The aussie was also supported today as Australian business confidence rose in March, a private bank survey showed. In Asian trading the aussie touched a one-week high at 1.0356 but fell by the end of the session toward 1.0300.
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