Yen awaits critical BOJ outcome; dollar adrift
By Rae Wee
SINGAPORE (Reuters) — The yen rose broadly on Tuesday ahead of a policy decision from the Bank of Japan (BOJ) later in the day which some traders hope will prove crucial in determining if and when the central bank will move away from negative interest rates.
Expectations are for the BOJ to maintain its ultra-loose monetary policy at the conclusion of its two-day meeting.
Still, investors will be parsing the outcome for hints as to how soon the BOJ could end a policy that is an outlier among major economies, particularly as comments from Governor Kazuo Ueda this month stoked speculation of an imminent policy shift.
Against the U.S. dollar, the yen rose more than 0.3% to 142.31, and stood not too far from a four-month high of 140.95 hit last week.
The Japanese currency has risen more than 6% since it touched a year low of 151.92 in November, in part due to a broadly weaker dollar and expectations that Japan's ultra-low rates environment could be nearing an end.
The euro fell 0.26% to 155.67 yen, while overnight volatility in the yen was last at 29.655%, after having jumped to its highest since July on Monday.
«While steady BOJ policy may be on the cards for this week, the meeting may still be instrumental,» said Jane Foley, senior FX strategist at Rabobank.
«In recent months, the commentary from some BOJ officials suggests a cautious, but tangible, increase in confidence that the conditions that would sustain a virtuous cycle of wage inflation, increased consumer demand and profitability are building.
»That said, it is also very clear from the remarks of BOJ officials that the central bank is in no rush to remove stimulus."
Elsewhere, the greenback languished near roughly five-month lows against the Australian
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