The yen slid to a two-month low versus the dollar as a divergence in the path of monetary policy between Japan and the U.S. drove the gap between the nations’ benchmark government bond yields to the widest since September.
Economists predict the Bank of Japan will leave policy unchanged today as it maintains efforts to produce 2 percent inflation, while Federal Reserve meeting minutes signaled a reduction in monetary easing “in coming months.” The euro held its steepest drop in three weeks as investors weigh the possibility of stimulus measures from the European Central Bank before President Mario Draghi speaks. The Australian dollar fell after a Chinese manufacturing gauge dropped.
“Technically, it’s looking like it’s moving toward a weaker yen,” said Greg Gibbs, a Singapore-based currency strategist at Royal Bank of Scotland Group Plc. BOJ officials are “still sticking to their guns on their inflation target and they’re prepared to do more if required.”
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