Investors will focus on whether the U.S. central bank
indicates that it expects to pause rate increases after May, or
if it keeps alive the possibility of another hike in June or
later.
A potentially key clue to that will come on Friday, with the
release of monthly employment data.
The European Central Bank (ECB), meanwhile, is widely
expected to raise rates for a seventh straight meeting the
following day, with a 50 basis-point increase on the table.
That lifted the euro to a more than one-year peak at $1.1096
last week.
By contrast, the BOJ on Friday opted to leave ultra-easy
stimulus settings in place and embarked on a review of its
monetary policy that could take 1-1/2 years, suggesting no hurry
at all to normalize policy.
The ECB and Fed decisions, along with the U.S. jobs data all
come when Japan will be observing the Golden Week holidays,
which run from Wednesday through to the end of the weekend.
At the RBA, traders are laying 87% odds for no change to
policy, although about 11 bps of tightening is priced for the
August meeting.
The Aussie ticked up 0.11% to $0.6638, but not
straying far from its anchor since last Tuesday around $0.66.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Kevin Buckland
Editing by Shri Navaratnam)
By Kevin Buckland
TOKYO, May 2 (Reuters) - The yen continued its steep
descent on Tuesday, reaching a 15-year low to the euro, as the
implications of a steadfastly dovish Bank of Japan kept foreign
exchange markets busy engaging in so called 'carry-trades'.
The Aussie dollar kept near the middle of its recent trading
range with the greenback ahead of the Reserve Bank of
Australia's (RBA) policy decision at 0430 GMT, with money
markets positioned for a second meeting with no change. However,
there remains a risk of another hike in the second half of the
year. The euro was steady at 150.965 yen after
earlier touching 151.03 for the first time since September 2008.
The greenback was about flat at 137.375 yen , and
earlier rose to 137.58 for the first time since March 8. A move
above 137.90 would be the highest level this year.
"The sign that the BOJ is not going to change its negative
interest rate policy any time soon gave the green light for
speculators to put yen carry trades back on," said Naka
Matsuzawa, chief Japan macro strategist at Nomura Securities.
The sale of First Republic Bank's assets to JPMorgan
Chase & Co also gave more confidence to investors over
the outlook for the dollar, Matsuzawa said.
"The odds of the Fed continuing on the rate hike process,
rather than rate cuts, is now a bit higher."
The single currency was little changed against the dollar at
1.0982 , trading near the bottom of its range of the
past week after data overnight showed U.S. manufacturing pulled
off a three-year low last month despite a build-up of
inflationary pressures.
That keeps the Federal Reserve on track to hike rates by a
quarter point on Wednesday.
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