USDJPY Holds Above 113 After BOJ Actions Awaiting ECB, BOE and NFP

The U.S. dollar traded in the upper 113 yen zone for most of Tuesday in Tokyo, largely maintaining its gains from New York overnight when the U.S. currency rose above 114 yen for the first time since December 2007 on expectations Japanese and U.S. monetary policy are set to diverge further.

At 5 p.m., the dollar fetched 113.57-59 yen compared with 113.99-114.09 yen in New York at 5 p.m. Monday. Financial markets in Tokyo were closed for a public holiday on Monday. It moved between 113.28 yen and 114.03 yen during Tokyo trading on Tuesday, changing hands most frequently at 113.60 yen.

The euro was quoted at $1.2505-2507 and 142.02-06 yen against $1.2477-2487 and 142.30-40 yen in New York late Monday afternoon.

The dollar had risen rapidly against the yen following the Bank of Japan’s surprise announcement last Friday that it will further ease monetary policy by expanding its asset buying program, putting it in sharp contrast with the U.S. Federal Reserve, which is gearing up to raise interest rates having ended its own quantitative easing program last month.

Monday’s unexpectedly positive October U.S. manufacturing data from the Institute for Supply Management boosted expectations the Fed will take a hawkish tack in the face of U.S. economic recovery, sending the dollar as high as 114.21 yen in New York.

But the dollar’s upside was capped in Tokyo ahead of the risk-heavy events of U.S. midterm elections on Tuesday and monthly U.S. jobs data looming on Friday, said Shinichiro Kadota, foreign exchange strategist at Barclays Bank.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza