Forex - Japanese yen retraces weakness after BoJ keeps policy steady

A A A - - The Japanese yen recovered earlier ground on Thursday after the central bank kept its policy target intact as expected.

The Bank of Japan decided by a unanimous vote to leave the bank's policy target unchanged, keeping its cautiously optimistic economic outlook despite recent soft retail sales.

"The Bank of Japan will conduct money market operations so that the monetary base will increase at an annual pace of about ¥60 to ¥70 trillion," the BoJ said.

USD/JPY traded at 104.82, up 0.02%, while AUD/USD traded at 0.9352, up 0.11%.

In Australia, the July trade widened to $A1.4 billion and July retail sales rose 0.4%. The trade balance was seen at a deficit of A$1.510 billion, while retail sales was seen up 0.4% month-on-month.

Overnight, the dollar traded largely lower against most major currencies on Wednesday as markets monitored talk of a Ukraine-Russian ceasefire, which favored the euro at the greenback's expense.

Both the greenback and the euro found support after Ukraine's President Petro Poroshenko said he had agreed with Russian President Vladimir Putin to take steps to establish a "permanent ceasefire" in eastern Ukraine.

Putin later said his views were "very close" with Poroshenko on finding a political way out of the conflict.

By afternoon trading on Wednesday, the euro edged out the dollar, becoming the chief beneficiary of market applause for a possible ceasefire.

Elsewhere, the U.S. Census Bureau reported earlier that factory orders rose 10.5% in July, below expectations for an increase of 11%, after a revised 1.5% rise in June, though markets largely viewed the data favorably.

On Tuesday, the Institute for Supply Management reported that its manufacturing purchasing managers' index jumped to 59.0 in August from 57.1 in July, defying analysts' calls for the index to tick down to 56.8.

On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.

In Europe, data revealed that euro zone retail sales fell 0.4% in July, in line with forecasts.

Investors were eager for the European Central Bank's announcement on policy on Thursday, with many betting that the monetary authority will roll out stimulus measures to kick-start the economy after the euro area's annual inflation rate slowed to a five-year low last month.

On Friday, the U.S. will release its August nonfarm payroll report, and investors hope the data will serve as weather vane pointing to the direction of monetary policy, sidestepping the greenback ahead of time.

The U.S. economy continues to gain steam, though Federal Reserve Chair Janet Yellen has expressed concern over slackness persistent in the labor market.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was flat at 82.88.

On Thursday, the U.S. is to release trade-balance data, the ADP report on private-sector job creation and the weekly report on initial jobless claims.

Also on Thursday, the ISM is to publish a report on U.S. service sector activity. offers an extensive set of professional tools for the financial markets.
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This article appears in: Investing , Forex and Currencies

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