Yen Drops in Forex Markets as Bank of Japan Issues Warning

The Bank of Japan indicated that it wasn’t planning to limit its stimulus packages any time soon after it kept monetary policy in largely the same position.

The Bank’s decision on Wednesday, which also saw inflation predictions reduced by a small margin, led to a decline in the value of the yen on the international markets.

The main winner of the day’s trading was the US dollar, which hit its highest point in twelve months as trading got underway in Asia’s markets.

The dollar index, which measures its performance compared to six other significant global currencies, saw a high point of 97.07 – which represents its biggest success since June 2017.

This index has been on the rise for a while, and it has seen more than half a year of consistent appreciation. However, this was a new high point.

In the USD/EUR pair, the dollar is staying strong at $1.1356. This is, however, down in part to domestic European political instability. Germany’s Chancellor Angela Merkel, who has been in office since 2005 and is largely seen as the most senior European politician, announced earlier this week that she would not be seeking re-nomination as Chair of the CDU party and eventually as Chancellor.

As the midweek point arrives, there’s a lot left for forex traders to watch out for towards the end of the week.

At lunchtime today (Wednesday), the US will release a series of employment statistics. ADP employment change figures for October are expected to show a drop from 230,000 to 189,000.

The employment cost index covering the third quarter of the year, however, is due to rise a little from 0.6% to 0.7%.

At 12.30pm GMT, the Canadian raw material price index for September will be out. It is due to go up from -4.6% to -.05%, although overall gross domestic product data for August is due to show a month on month drop from 0.2% to 0.0%.

Into Thursday, Australian trade balance information for September will be due out at 12.30am GMT. It is likely that this will also rise from 1,604,000 to 1,700,000.

British house price data for October is expected at 7am. Month on month, this is expected to decline from 0.3% to 0.2%.

Later in the day will be the Bank of England’s interest rate decision and quarterly inflation report, both of which are due out at 12pm GMT. Interest rates are due to stay at 0.75%.

Focus is likely to return to the US later on as productivity data for the third quarter of the year comes out. Preliminary nonfarm data for the third quarter of 2018 is expected to show a slight drop from 2.9% to 2%, while unit labour costs are expected to change from -1% to +1.2%.

On Friday, average US hourly earnings for October are set to rise substantially from 2.8% to 3.1%. This development could have far-reaching implications when the Federal Reserve makes it assessments of the health of the US economy when deciding on interest rate rises.