- BOJ holds interest rates at 0.75% as expected, in 6-3 vote
- Yen steady after BOJ press conference
- Dollar edges higher after two-day losing streak ahead of Fed meeting
LONDON/SINGAPORE, April 28 (Reuters) - The Japanese yen steadied on Tuesday, having firmed initially after the Bank of Japan held interest rates steady in a split vote, while the dollar nudged higher as markets focused on central bank policy decisions and guidance while the Iran war loomed large.
The yen was last a touch lower against the dollar at 159.63 and slightly firmer against the euro at 186.75, paring back most of the gains it made after the BOJ's verdict that saw three of its nine-member board break ranks to call for higher borrowing costs.
In its , the BOJ also sharply revised up its core inflation forecasts for the fiscal years ending March 2027 and March 2028, while slashing its growth forecasts for both years.
Governor Kazuo Ueda in a press conference left the door open to a rate hike but gave little indication about what the timeline for a policy change could look like.
“The yen strengthened right after the policy meeting because the BOJ’s economic outlook was hawkish, and there were three dissenters to the decision. So the market cautiously awaited the press conference of (BOJ Governor) Ueda. But he was not as hawkish as the statement sounded, which was why the yen pared early gains," said Takeshi Ishida, a strategist at Kansai Mirai Bank.
The persistent yen weakness remains a source of concern for Tokyo. Earlier on Tuesday, Japanese Finance Minister Satsuki Katayama warned speculators again, saying that volatility in the crude oil futures market is affecting currency markets, adding that authorities are "standing by around the clock" to take "decisive action".
Meanwhile, the U.S. dollar index , which measures the greenback's strength against a basket of six currencies, snapped a two-day losing streak to trade 0.18% higher at 98.64.
U.S. President Donald Trump discussed a new Iranian proposal on resolving the war with his top national security aides on Monday. But a U.S. official said later that Trump is unhappy with the proposal because it did not address Iran's nuclear program.
While oil futures have been rising as the prospect of conflict resolution looks uncertain, the U.S. dollar has been struggling to find support.
"I think one of the big components that is limiting the appetite for dollar buying is the resilience of US equity markets in particular. So corporate earnings are coming in strong. We've got another wave of optimism in relation to AI. So tech is outperforming. And I think in that context, that kind of positive global growth dynamic is offsetting some of the risks in relation to higher energy," said Derek Halpenny, head of research, global markets EMEA at MUFG.
Markets are also watching out for the Federal Open Market Committee meeting on Wednesday. The U.S. central bank is expected to keep rates on hold in what is likely to be Chair Jerome Powell's last meeting after Republican Senator Thom Tillis dropped his block on Kevin Warsh's confirmation process on Sunday.
"It’s not a meeting where rates policy is on the front burner, but the FOMC assessment of the economy may improve," said Steve Englander, global head of G10 FX research at Standard Chartered in New York. "The inflation picture is improving very slowly at best and could be an emerging issue for Warsh to deal with" when he takes office.
Central banks in the euro zone, the UK and Canada are among the others that will deliver rate decisions later this week.
The euro was down 0.14% at $1.1704, while the British pound eased 0.17% to $1.3507.
Bitcoin was last slightly lower at $76,908.04, while ether dipped 0.15% to $2,289.02.
Reporting by Sophie Kiderlin in London and Gregor Stuart Hunter in Singapore; additional reporting by Junko Fujita in Tokyo. Editing by Shri Navaratnam and Keith Weir
Source: Reuters