Euro and yen feel the heat before central bank meetings

Euro and yen feel the heat before central bank meetings

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Thursday morning witnessed the euro and yen reeling under the pressure of central bank meetings. Investors looked for possible catalysts coming out from meetings between the European Central Bank and the Bank of Japan. 

Meanwhile, the dollar held its reigns and remained steady against the yen with a 113.8 mark. Interestingly, it stands nearer to its year high of 114.69, which it hit in October 2020. On the other hand, it reached USD 1.1591 by slipping 0.1 per cent. Thus, it seems to be turning its heads towards USD1.1523, a 15 month low, that it plunged a month back. 

On the other side, the Australian dollar skidded to USD 0.7491 by losing 0.3 per cent. However, it stayed around its 3 months top, post the central bank negated to purchase a government bond as the most important part of the stimulus programme. It was despite the yields being well beyond their target 0.1 per cent. 

It sent bond yields even higher. It happened after an astonishing rise in core inflation, which was sparked rate surge speculation. 

The yield target remains important to the Australian Reserve Bank’s case. According to it, the 0.1 per cent cash rate shouldn’t rise until 2024. It means if it fails to maintain the price of the fuels market, the rates will be required to increase earlier; perhaps in the mid-2022 or even before.

On Thursday, the Bank of Japan is all set to keep the settings of its monetary policy steady. It may project inflation to remain below its 2 per cent target for at least 2 more years. 

Meanwhile, investors will be watching out for the stance of the ECB on rising global prices for consumers. Also, they’ll require clarity on the outlook. 

The key decision of ECB’s emergency stimulus will be decided in the December meeting. The recent rise in interest rates expectations has triggered traders to look for clues from the meeting. 

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