The yen held a two-day loss against the dollar before central bank statements this week that may signal extended monetary easing in Japan as the U.S. plans an exit from stimulus.
Demand for the yen was limited before the release tomorrow of minutes from the Bank of Japan’s June 10-11 meeting when policy makers stuck with a pledge to expand the monetary base by as much as 70 trillion yen ($700 billion) per year. Federal Reserve Chairman Ben S. Bernanke is scheduled to testify on monetary policy this week. The 17-nation euro remained higher against Japan’s currency before German data forecast to show investor sentiment in Europe’s biggest economy improved.
“There’s a good chance Bernanke will again suggest the Fed will start to taper monetary easing as early as September,” said Noriaki Murao, a New York-based managing director of the marketing group at the Bank of Tokyo-Mitsubishi UFJ Ltd. “If that’s the case, the initial reaction is likely to be dollar buying and yen selling.”
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