Yen stronger ahead of BoJ policy views, Kiwi up on strong GDP

by Jonathan Adams

The yen gained in early Asia on Thursday ahead of a central bank review of policy, while the Kiwi gained after better than expected GDP data.

USD/JPY changed hands at 105.82, down 0.17%, while NZD/USD rose 0.64% 0.7079. AUD/USD traded at 0.7415, up 0.09%.

In New Zealand, first quarter GDP rose 0.7% quarter-on-quarter, compared to an expected rise of 0.5%, while the year-on-year pace came in at a gain of 2.8%, compared to 2.6% seen.

Ahead in Australia, employment change figures for May are expected to show 15,000 jobs added for an unemployment rate of 5.7%.

Later, the Bank of Japan releases its latest interest rate decision with markets looking for clarity on the scope for further easing measures. There is concern for the BoJ that a delicate economic climate could dampen inflation expectations further and a sharp yen rise could hurt business sentiment.

That should keep the pace of asset purchases at ¥80 trillion annually and the 0.1% negative interest rate on excess reserves unless the yen surges.

“The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labour market indicators will strengthen,” the FOMC said in the statement. “Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 per cent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labour market strengthens further.”

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