Major currencies pause as BOJ and Fed decisions loom
On Tuesday, key currencies came to a standstill as market participants look to this week's policy gatherings of the BOJ and the Fed, with speculation that the Japanese major bank is on the verge of making crucial changes to its easing program.
The evergreen buck sank to 101.84 yen, approximately 0.4% lower than late the previous week, although it remained anchored in its trading range of the previous weeks between 101.20 and 103.35.
In recent week, BOJ officials have suggested that there’s enough room to drop interest rates further notwithstanding criticism that they’re heavily hurting financial institutions and also damaging economic sentiment. Really, there’s talk Japan’s major bank could make negative interest rates the key focus of its monetary policy at this week's review.
The major bank has also acknowledged the potential costs of its unorthodox policy, thus prompting speculation the bank will most likely consider steepening the yield curve in order to mitigate the impact of negative rates on financial institutions.