The Yen advanced against the Euro for a fourth consecutive day on speculation that the Bank of Japan may not decide to add stimulus during this month’s policy meeting, diverging from the E.U.’s central bank which unveiled a series of measures to bolster the economy.
Yen Rallies Against Euro
The Yen rose against the Euro despite mixed economic fundamentals which showed that the Japanese BSI business conditions posted at -14.6 for the second quarter of the year, after posting at 12.7 in the initial three months. CGPI climbed in May from 0.1 to 0.3 percent. Meanwhile, the gauge which measures the fluctuations for the Yen versus the greenback continued at a record low as the live Forex market awaits for the BOJ’s governor, Haruhiko Kuroda, to speak once the central bank delivers its policy decision. The monetary authorities have been purchasing an approximate 7 trillion Yen in government bonds per month since April of last year, a stimulus measure that normally debases the Yen. Most economists surveyed believe that the central bank could maintain the status quo and refrain from expanding monetary easing, unlike the ECB which unveiled numerous stimulus plans.
Sterling Trades Higher
The British Pound surged to session highs against its U.S. counterpart after the U.K. announced that the rate of unemployment declined from 6.8 to 6.6 percent in the months of February through April, the lowest in almost five years. At this time, the Bank of England has indicated that officials are split on whether to raise the borrowing costs. Some of them have suggested that the first rate hike could be approaching. Other news showed that the claimant count or number of individuals who filed for jobless benefits dropped by 27,400, surpassing forecasts for a dip of 25,000. The Sterling also strengthened versus the Euro.
Euro Slides Against Dollar
The Euro weakened further against the U.S. currency on Wednesday as the yield gap between European bonds and U.S. Treasuries widened. And despite the lack of economic fundamentals, the Euro continued to trade to the downside. World currency analysts believe that the 18-nation monetary unit is under pressure after the World Bank downgraded its growth outlook, and stated that the terrible winter in the U.S., together with the political crisis in the Ukraine prompted it to reduce its outlook. However, it added that the U.S. and the Euro-zone will probably see economic expansion this year. Bank officials cited the reduction in government spending and improvements in employment as the main factors for spurring growth.