Forexpros – The dollar rose against the yen on Tuesday, as investors went long on the greenback on anticipation the Federal Reserve will announce no major changes at a Tuesday meeting while the Bank of Japan will do likewise going forward as well.
In Asian trading on Tuesday, USD/JPY hit 82.41, up 0.22% up from a low of 82.23 and off a high of 82.43.
The pair sought to test support at 81.48, Friday’s low, and resistance at 82.64, Friday’s high.
Both the Federal Reserve and the Bank of Japan are expected to announce moves on interest rates later Tuesday, with both central banks largely seen leaving benchmark interest rates unchanged.
The big issue lies at the U.S. Federal Reserve, and whether the U.S. central bank will hint at a need for fresh stimulus measures such as asset purchases from banks, known as quantitative easing, which would weaken the dollar.
Improving unemployment rates in the U.S. have fueled consensus that Federal Reserve would be inclined to hold off on talk of stimulus for now, although proximity to the meeting has the market a little anxious and edgy.
Meanwhile, no change in policy in Japan would likely shift attention to the dollar, which reflected in Asian trading on Tuesday.
Also out of Japan, the country’s Tertiary Industry Index, which measures the change in the total value of services purchased by businesses, was down 1.7% in January from December, which was weaker than expected.
The yen, meanwhile, was up against the pound and up against the euro, with GBP/JPY rising 0.16% to 128.83 and EUR/JPY up 0.21% at 108.41.
Aside from U.S. and Japanese monetary policy statements expected Tuesday, the U.S. is to release government data on retail sales, the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.
The country is also to produce official data on business inventories, a signal of future business spending.
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