The yen was flat on Wednesday after rising nearly 4% in the previous session as the Bank of Japan (BOJ) unexpectedly changed a key policy, giving investors more room to manoeuvre. debt income.
The Bank of Japan decided on Tuesday to change its "yield curve control" policy, leaving broad monetary policy parameters unchanged. The 10-year yield can now move 50 basis points to either side of the 0% target, which is a wider range than the previous 25 basis points.
the yen It rose less than 0.1% on Wednesday to 131.55 to the dollar, not far from the four-month high of 130.58 hit on Tuesday, when the yen jumped 3.8% during its highest daily gain since 1998.
The increase is a sign that investors expect the Bank of Japan to further tighten monetary policy in upcoming hikes, said Derek Halpenny, head of research at Japan's MUFG bank.
On the other hand, the euro rose 0.11% against the dollar to close at 1.063 dollars. The pound it fell 0.25% to $1.216.
Moderate activity in the foreign exchange markets on the Wednesday before the holiday, with low trading volumes.
New for 2022 was the strength of the dollar, which soared as the US Federal Reserve raised interest rates at a rapid pace, drawing investors into the country's fixed income assets.
However, the dollar index is down about 9% since reaching a 20-year high in September, and a sharp slowdown in US inflation has raised hopes that the Federal Reserve will end its cycle soon. inflation adjustment.
The index, which measures the dollar's performance against a basket of six currencies, fell less than 0.1% on Wednesday to 103.89.
Many analysts expect the dollar to continue to weaken over the next year as inflation subsides and the Federal Reserve's rate hikes end.
Goldman Sachs expects the euro to fall to 1TP4Q1.02 in the first three months of the year, then strengthen to 1TP4Q1.10 within 12 months.