Yen Rises After BOJ Keeps Rate Unchanged As Expected

The Japanese yen strengthened against other major currencies in the Asian session on Friday, after the Bank of Japan maintained its benchmark rate unchanged as widely expected.

In a unanimous vote, the Policy Board decided to maintain the uncollateralized overnight call rate to remain at around 0.25 percent.

The BoJ had ended its negative interest rate policy in March.

In the statement, the BoJ said the economy has recovered moderately, although some weakness has been in part.

This week, the U.S. Federal Reserve slashed its benchmark rate by a more-than-expected half a percentage point, which was the first reduction in over four years. On Thursday, the Bank of England maintained its bank rate at 5.00 percent after a quarter-point reduction in August.

Data from the Ministry of Internal Affairs & Communications said the annual inflation in Japan rose to 3% in August (the highest level since October 23) from 2.8% in the prior three months.

On monthly basis, the CPI rose by 0.5% in August, after a 0.2% increase in July.

The core consumer price index in Japan increased by 2.8% year-on-year in August, the highest reading since February.

In the Asian trading now, the yen rose to a 2-day high of 167.76 against the Swiss franc, from yesterday’s closing value of 168.52. The yen may test resistance near the 165.00 region.

Against the euro and the pound, the yen advanced to 158.53 and 188.73 from Thursday’s closing quotes of 159.44 and 189.74, respectively. If the yen extends its uptrend, it is likely to find resistance around 154.00 against the euro and 183.00 against the pound.

Against the U.S., Australia, the New Zealand and the Canadian dollars, the yen edged up to 141.97, 96.80, 86.66 and 104.72 from yesterday’s closing quotes of 142.62, 97.28, 89.09 and 105.34, respectively. On the upside, 139.00 against the greenback, 94.00 against the aussie, 86.00 against the kiwi and 103.00 against the loonie are seen as the next resistance levels for the yen.

Looking ahead, U.K. retail sales and public sector finance figures, both for August are due to be released in the pre-European session at 2:00 am ET.

In the New York session, Canada retail sales data for July, Canada industrial product, new housing and raw materials price indices for August and U.S. Baker Hughes oil rig count data are slated for release.

At 10.00 am ET, the European Commission is slated to issue euro area flash consumer sentiment survey data. The confidence index is forecast to improve to -13.0 in September from -13.5 in August.