Dollar Moves Higher as Yen Slips Lower

The U.S. dollar was higher against a currency basket on Tuesday following the end of a three-day U.S. government shutdown. Meanwhile, the yen slid lower after the head of the Bank of Japan reaffirmed his support for monetary easing.

Forex screen with charts and currencies

The U.S. dollar index is used to measure the greenback’s strength against a trade-weighted basket of six major international currencies. It rose to 90.28 or 0.16 percent by 03:01 AM ET (08”01 AM GMT). It stood near its three-year low of 89.96 recorded on Friday trading.

Congress, on Monday, approved to fund the government for around three weeks and President Donald Trump signed the bill. This then ended the three-day government shutdown.

Euro was a tad lower against the dollar. EUR/USD dropped 0.13 percent to 1.2247, still not far from its three-year peaks of 1.2322 touched last Wednesday.

Demand for euro continued to strengthen ahead of the European Central Bank’s meeting set on Thursday. The meeting can provide insight regarding the possible shift in monetary policy in the future.

Sterling fell with GBP/USD at 1.3955, falling 0.21 percent which was not far from an overnight high of 1.4002. The latter was the strongest listed level since June 2016, when Britain voted to exit the European Union. The British pound was boosted by hopes that Britain will obtain a favorable Brexit deal.

On the other hand, the Australian and New Zealand was lower against their U.S. counterpart. AUD/USD was down to 0.7960, dropping 0.67 percent while NZD/USD slid 0.25 percent to 0.7309.

Yen Dips Following BOJ Head Statement

The yen reached lows overnight following BoJ Governor Haruhiko Kuroda’s statement.

Kuroda stated that there is still some distance to overcome before reaching the banks 2 percent inflation target. He then added that there is no debate regarding the timing of an exit from its loose monetary policy.

“I don’t see anything in today’s announcement that suggests a change in the BOJ’s stance. Rather today’s price action talks more about how the market is preoccupied with the idea that the BOJ will adjust its monetary policy at some stage in the future,” said chief forex analyst, Minori Uchida.

USD/JPY was at a high of 111.16 after the remarks were made. It then pulled back marginally to trade at 111.02.

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