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Bank of Japan's Decision to Leave Rates Unchanged Sends Japanese Yen Tumbling
Tuesday, 10 April 2007 21:24:08 GMT  |  Kathy Lien, Chief Strategist
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– As we expected, the Bank of Japan left interest rates unchanged at 0.5 percent.  The vote was unanimous as the central bank made no alterations to its economic outlook. The low level of inflation is the primary factor that is holding back the central bank from lifting interest rates.  By saying that core prices will most likely remain near zero for the next few months, the central bank President Fukui essentially gave his blessing to carry trades.  AUD/JPY hit a 17 year high while EUR/JPY hit a record high as a result.  Japanese officials also felt fairly confident that the weak Yen would not be criticized at the upcoming G7 meeting.  With the world turning a blind eye to the recent sell-off in the currency, we have yet another reason for carry traders to return to the markets. Tonight we are expecting Japan’s machinery orders, trade and current balance figures.  The weak Yen should have a very beneficial impact on exports. 

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