Forex Market Review – USDJPY hits 3-wk high after BOJ; EURUSD falls on Moody’s cuts

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The yen weakened sharply against the dollar after the Bank of Japan unexpectedly eased monetary policy after the bank monetary policy meeting today. The BOJ announced its decision continue its asset-buying program and added another 10 trillion yen. USDJPY opened in Asia at 77.56 and rose to 77.99, its highest level since January 26.

 

Yen also fell against the euro, despite the single currency being battered against other pairs. EURJPY opened in Asia at 101.81 and climbed to 102.61 after the BOJ announcement.

 

Euro tumbled against the dollar after Moody’s rating agency said it downgraded sovereign ratings of six countries in Europe. Moody’s also lowered its outlook on the UK.

 

EURUSD extended its decline to 1.3126 after opening the Asian session at 1.3185. Since Monday, the pair has fallen from 1.3283, after being lifted on optimism after news that the Greek parliament had voted on austerity measures over the weekend. This would allow Greece to receive a second bailout to avert default.

 

The focus now shifts to a euro-zone finance ministers meeting on Wednesday in Brussels where the bailout deal is to be signed off. But Greece must first specify to them how 325 million euros of the 3.3 billion euros demanded in budget savings will be achieved.

 

The Australian dollar gave back all previous gains after being weighed down by wrangling over the Greek bailout and a string of sovereign downgrades in Europe.  AUDUSD fell to a low of 1.0662 from 1.0729.

 

Demand for the safe haven US dollar pushed up the ICE Dollar Index, which tracks the dollar against a basket of currencies, to 79.209 from 79.031.