The pair is likely to maintain a firm undertone today in Asia thanks to renewed expectations that the Bank of Japan would take additional easing measures at the next policy board meeting on Jan. 21 and 22. The Nikkei reported earlier today that government and BOJ officials have reached a basic agreement on basis details of a joint statement on fighting deflation. The document will call for the BOJ to adopt a 2% inflation target, and charge the central bank’s governor with reporting regularly on progress toward this objective, according to the report. As a result, the yen fell to Y90.13 per dollar, the weakest since June 23, 2010, while sliding to Y120.61 against the euro, the weakest since May 2011. But the pair may turn to hostage to the risk of typical pre-weekend position-adjustment unless more convincing leads emerge to push down the valueof the yen. Investors will also focus on developments on talks on the debt ceiling in the U.S. for implications for risk sentiment and the FX markets.
EasyForexNews Research Team