Yen rises on speculation of BOJ policy tweak; dollar ebbs
yen hovered near a two-week high on Tuesday, boosted by a report that the Bank of Japan (BOJ) could further tweak a key bond yield policy tool when it announces its monetary decision later in the day.
The dollar looked set to end the month largely unchanged against a basket of currencies, having lost some steam after a roughly 2.5% gain in September. Yet, the greenback is being underpinned by risks of another rate hike from the Federal Reserve, analysts say, noting a still-resilient U.S.
economy.
The Japanese yen was last at 149.13 per dollar, after jumping to a two-week high of 148.81 in the previous session following a Nikkei report that the BOJ could potentially allow 10-year Japanese government bond yields to rise above 1% at a keenly-awaited policy decision later on Tuesday.
«This of course may prove to be something of a red herring, and they may leave policy unchanged, instead offering a strong view that changes to the yield curve control cap are imminent,» said Chris Weston, head of research at Pepperstone.
«All things being equal, a move to lift the YCC cap from 1% to 1.5% should bring out further (yen) buyers, and push USD/JPY and the crosses lower through trade.»
Against the euro, the yen last stood at 158.24, having similarly risen to an over one-week high of 157.70 per euro on Monday. The Australian dollar last bought 94.50 yen .
In other currencies, the dollar edged broadly lower following a pick up in risk appetite, with Israel's ground offensive in Gaza seemingly less extensive than previously feared.
The dollar index last stood at 106.20.
Armoured Israeli forces attacked the Gaza Strip's main city from two directions on Monday and targeted the main road linking it to the south of Gaza, witnesses
