By ForexMansion.com

 

The USD/JPY Pair recorded its highest level in six months at 85.51, due to expectations that the Federal Reserve Bank will raise interest rates. In addition, investors are highly expected to return to carry trades and sell low yielding currencies like the yen to invest in higher yielding currencies; prompted the yen to drop against the dollar and other major currencies.

On the other hand, BoJ kept interest rates steady between 0.0% and 0.10% along with maintaining its credit program unchanged, and an asset-purchase fund that represents the BoJ’s main policy tools intact, which aim to support the Japanese economy that is suffering from the earthquake aftermath.

The BOJ decided to offer a 1 trillion yen in one-year loans for businesses hurt by the nation’s record earthquake, pushing the Japanese yen to rise against the dollar bringing the pair to 85.09, however it is expected that the yen will decline once again as demand on high yielding currencies increase.

On Friday as of 05:00 GMT; the Japanese economy will issue data on the Current eco-watchers survey for March with the previous reading at 48.4; along with U.S. housing starts issued during march as of 12:15 GMT, which had a previous reading of 181.9 thousand houses, along with the wholesale inventories index for the month of February which had a previous reading of 1.1 percent.

The US data may affect the pair’s movement in a huge manner due to lack of important Japanese data, which may lead the pair to rise incase of improved US data.

Originally posted here

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