Yen Slips as BOJ Keep an Ultra-Loose Stance

On Tuesday, the yen fell as U.S. Treasury yields rose to near two-year highs. The Bank of Japan reaffirmed its commitment to maintaining an ultra-easy monetary policy. However, higher yields did little to boost the greenback’s value against other currencies.

The dollar rose 0.37 percent against the yen to as high as 115.05 per dollar, having traded as low as 114.5.

It then reduced its gains to 114.84.

The global reflation trade and rising U.S. yields indicate that the yen is under pressure to depreciate.

U.S. two-year yields, which track short-term interest rate expectations, surpassed 1% for the first time since February 2020, closing at 1.036 percent, up nearly 7 basis points.

Benchmark 10-year yields increased by more than six basis points to as much as 1.8550 percent, the highest since January 2020, as markets priced in a March hike and three more by the end of the year.

Furthermore, the Bank of Japan expects to keep conditions ultra-accommodative for a more extended period, with an increase in inflation remaining modest, hovering around 1.0 percent in 2022.

However, the U.S. dollar gained less ground against other major currencies.

The Euro

The euro was down 0.09 percent at $1.1398. The pound was unchanged at $1.3635. It left the dollar index, which tracks the currency against six peers, at 95.325, in the middle of its recent range up only 0.07 percent on the day.

There is no significant economic data for the eurozone this week. Still, investors will be paying attention to speeches from European Central Bank President Christine Lagarde and other ECB members, as well as the minutes of the central bank’s December policy meeting, which will be released on Thursday.

The Australian dollar fell 0.23 percent to $0.7192 after data revealed that an increase in coronavirus cases had harmed Australian consumer confidence.

Bitcoin was trading at $42,000, falling from a record high of $69,000 in November.