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Yen weaker after BoJ hold steady, keep quite on easing stance

7/20/2017, 2:55:19 PMMarket Analysis
Yen weaker after BoJ hold steady, keep quite on easing stance

The yen weakened on Thursday with the Bank of Japan largely mum on when inflation could lead to easing aggressive monetary policy.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.07% to 94.71. USD/JPY changed hands at 11.07, down 0.12%, while AUD/USD traded at 0.7937, down 0.20%.

The Bank of Japan kept monetary policy steady on Thursday, but did offer language to suggest a near-term change in the stance was not on the cards.

"Risks to the economy and price outlook are skewed to the downside," it said, conceding it has proved harder than expected to change public perceptions that deflation will persist.

The Bank of Japan’s monetary policy statement and interest rate decision was expected to offer comment on the pace of asset buying at ¥80 trillion annually and possibly hint of tapering.

Earlier in Japan, the trade balance for June came in at a surplus of ¥440 billion, missing an expected gain of ¥485 billion. Australia reported jobs data with the employment changeshowing 14,00 new workers, below the 15,000 workers seen, for an unemployment rate of 5.6% in June as expected, a tick higher than 5.5% in May.

Overnight, the dollar traded higher against a basket of global currencies on Wednesday, buoyed by upbeat housing data indicating a turnaround in the sluggish pace of U.S. home building.

U.S. homebuilding in June topped analysts’ expectations, after declining for three straight months, as both single-family and multi-family construction increased, offsetting the recent raft of economic reports pointing to possible weakness in the economy.

Housing starts jumped 8.3 percent to a seasonally adjusted annual rate of 1.22 million units, the highest level since February, the Commerce Department said on Wednesday.

Economists had forecast activity rising to a rate of 5.8%.

The better-than-expected economic data helped the greenback recover recent losses as traders look ahead to the European Central Bank (ECB) meeting Thursday amid expectations that the central bank would avoid elaborating on its plans to taper its asset-purchase program.

Investors will also have to contend with an interest rate decision from the ECB, with the majority of analysts expecting an unchanged decision from the central bank.