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    Asian Session – Yen advances as BoJ stands pat; Aussie and kiwi in retreat

    The Japanese yen firmed in Tuesday’s Asian session after the Bank of Japan kept monetary policy unchanged at its latest meeting. Although no change had been expected by the markets, the Bank of Japan removed the bias for further cuts to its interest rate to negative in today’s statement. The US dollar fell from a high of 114.14 yen earlier in Asian trading to 113.20 yen in late session. The euro and the pound both also weakened, declining to 125.65 and 161.25 yen respectively.

    The yen’s appreciation came despite assurances from Bank of Japan Governor Haruhiko Kuroda who said at the press conference after the meeting that the Bank stands ready to ease policy further if necessary. Kuroda also expressed concern at the weakening shorter term inflation expectations and was more downbeat about the prospects for exports and production. Some analysts expect that the Bank will ease monetary policy further in the coming months.

    In other central bank news, the Reserve Bank of Australia published its March 1st meeting minutes where it reiterated that continued low inflation may provide scope for further easing. The Australian dollar extended its losses after the minutes, which had already come under pressure this week from falling commodity prices. The aussie was down at 0.7473 versus the US dollar in late Asian session, down from an 8-month high of 0.7593 yesterday. The kiwi also fell back, dropping to 0.6643.

    Crude oil prices headed lower for a second day on concerns that last week’s gains may have been overdone and doubts remain about the agreement between major producers to limit supply. US oil futures were down 2.2% at $36.38 in late Asian session today.

    In European currencies, the euro jumped back above 1.11 dollars on falling risk appetite and better-than-expected French final CPI readings. The single currency was last trading at 1.1112 versus the dollar and at 0.7796 against the pound.

    Meanwhile, sterling was unable to hold on to the 1.43 handle against the dollar and retreated to 1.4250 in late Asian session. Trading in the pound is likely to stay cautious ahead of tomorrow’s UK budget statement and Thursday’s Bank of England meeting.

    Looking ahead to the rest of the day, US retail sales for February will be the main data for the day but the latest global dairy auction will also be eyed for the New Zealand dollar.

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