Yen Extends Fall After BOJ Rate Decision

(RTTNews) - The Japanese extended its early fall against other major currencies in the Asian session, after the Bank of Japan left its monetary policy unchanged in the first rate-setting meeting chaired by Governor Kazuo Ueda.

The Policy Board unanimously decided to maintain a negative interest rate of -0.1 percent on current accounts that financial institutions maintain at the central bank.

The BoJ also decided to keep its yield curve control policy unchanged. The bank will continue to purchase a necessary amount of Japanese government bonds without setting an upper limit so that 10-year JGB yields will remain at around zero percent.

Today, the central bank raised its inflation outlook for the fiscal 2023 to 1.8 percent from 1.6 percent and the projection for the fiscal 2024 to 2.0 percent from 1.8 percent.

At the same time, economic growth projection for the fiscal 2023 was trimmed to 1.4 percent from 1.7 percent. Meanwhile, the outlook for the fiscal 2024 was lifted to 1.2 percent from 1.1 percent.

The higher Asian markets also led to the fall of the safe-haven yen. The stock markets traded higher to earnings-driven rally among US technology stocks and offset lingering concerns about the U.S. banking sector.

Traders now await the Fed's preferred inflation gauge later in the day for hints on when the Federal Reserve might consider pausing interest rate rises.

The safe-haven currency fell earlier after the release of some positive economic news and started retreating.

Data from the Ministry of Economy, Trade and Industry showed that the industrial production in Japan was up 0.8 percent on month in March. That topped forecasts for an increase of 0.5 percent following the 4,6 percent spike in February. On a yearly basis, industrial output sank 0.7 percent, roughly in line with expectations after shedding 0.5 percent in the previous month.

The METI also said The total value of retail sales in Japan was up 7.2 percent on year in March, coming in at 14.567 trillion yen. That exceeded expectations for an increase of 5.8 percent following the 7.3 percent gain in February. On a seasonally adjusted monthly basis, retail sales added 0.6 percent - slowing from 2.1 percent in the previous month.

Meanwhile, data from the Ministry of Internal Affairs and Communications (MIAC) showed that the jobless rate in Japan came in at a seasonally adjusted 2.8 percent in March. That was well above forecasts for an increase of 2.5 percent and up from 2.6 percent in February. The participation rate was 62.6 percent, beating forecasts for 62.4 percent and up from 62.1 percent a month earlier.

In the Asian trading today, the yen fell to a 3-day low of 148.57 against the euro, from an early 2-day high of 146.81. On the downside, the yen is likely to find support around the 150.00 area.

The yen slid to 168.27 against the pound for the first time since 15th December 2022, from an early high of 166.43. The yen is likely to find support around the 170.00 level.

Moving away from an early high of 133.37 against the U.S. dollar, the yen slipped to an 8-day low of 134.94. The yen may test support around the 139.00 area.

Against the Australia, the New Zealand and the Canadian dollars, the yen dropped to 3-day lows of 89.34, 82.93 and 99.20 from early highs of 88.43, 82.09 and 98.05, respectively. If the yen extends its downtrend, it is likely to find support around against 91.00 against the aussie, 84.00 against the kiwi and 100.00 against the loonie.

Looking ahead, Swiss retail sales data for March is due to be released at 2:00 am ET. Half-an-hour later, Swiss KOF leading indicator for April is also due.

German unemployment rate for April, German and eurozone flash Q1 GDP data are slated for release in the European session.

At 4:00 am ET, President of the Bank Council Barbara Janom Steiner and Swiss National Bank Chairman, Thomas Jordan, will deliver speeches at Swiss National Bank general meeting of shareholders, in Bern, Switzerland.

In the New York session, German preliminary inflation data for April, Canada GDP data for February, U.S. PCE price index for March, U.S. Chicago PMI for April, U.S. University of Michigan final consumer sentiment index for April and U.S. Baker Hughes oil rig count data are due.