By Rae Wee
SINGAPORE, April 28 (Reuters) - The Japanese yen fell on
Friday after the Bank of Japan (BOJ) stood pat on its ultra-easy
monetary policy, while the U.S. dollar was on track for a second
straight monthly loss.
In a closely watched decision, the BOJ on Friday
announced it will maintain ultra-low interest rates, as
expected, and made no tweaks to its yield curve control by a
"unanimous vote".
However, the BOJ said it will remove forward guidance
that pledges to keep interest rates at current or lower levels.
The yen slid in volatile trade following the
decision, and was last 0.5% lower against the dollar at 134.60 .
It had jumped in the immediate aftermath of the decision,
before reversing its gains.
Earlier on Friday, government data showed that core consumer
prices in Japan's capital, Tokyo, rose 3.5% in April from a year
earlier, beating market forecasts in a sign of broadening
inflationary pressure in the world's third-largest economy.
"This puts pressure on the BOJ, they might do something in
the near future," said Tina Teng, market analyst at CMC Markets.
In the wider currency market, the U.S. dollar found some
support from data pointing to still-sticky inflation in the
United States, which reinforced expectations for a
25-basis-point rate hike at next week's FOMC meeting. .
Against a basket of currencies, the U.S. dollar index rose 0.1% to 101.55, though remained on track for a monthly loss
of about 1%, after having fallen about 2.3% in March.
Sterling slipped 0.06% to $1.2492.
Data released on Thursday showed that while U.S. economic
growth slowed more than expected in the first quarter, consumer
spending, which was accompanied by a rise in inflation,
accelerated.
A measure of inflation in the economy, the price index for
gross domestic purchases, rose at a 3.8% pace after increasing
at a 3.6% rate in the fourth quarter, while the core PCE price
index jumped at a 4.9% rate after advancing at a 4.4% pace in
the prior quarter.
"The Fed is widely expected to hike again next week but with
inflation remaining sticky, we expect the Fed to stay on hold
for the remainder of the year, dashing hopes of a policy pivot
in (the second half)," said analysts at Societe Generale.
Elsewhere, the euro fell 0.1% to $1.1016, but
remained near its recent one-year high. The common currency was
eyeing a monthly gain of more than 1.5%.
The euro has been buoyed by expectations the European
Central Bank still has more to go in raising interest rates, in
contrast with a dovish repricing of its U.S. counterpart.
"Investors favour currencies that can offer both an ongoing
domestic tightening cycle and still some room for a hawkish
surprise at the coming meetings," said ING analysts. "In that
sense, the euro is one of the very few currencies that can offer
this combination at the moment."
Down Under, the Australian dollar was flat at
$0.6630, while the kiwi gained 0.09% to $0.6153.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Rae Wee; Editing by Lincoln Feast)
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.