Risk Appetite Shift Pushes Dollar Higher

A shift in risk appetite as a result of the growing concerns over the spread of the coronavirus in much of Europe pushed the US dollar broadly higher. Earlier this week, the US Federal Reserve had issued its latest policy decision; largely as expected, interest rates were unchanged. The head of the US central bank also reiterated the bank’s guidance on possible future rate hikes. Jerome Powell pushed the Fed’s dovish agenda and said that the stance would be maintained until data suggested the need for a policy shift. An increase in bond yields for US Treasury instruments has also impacted risk appetite; risk-linked assets such as the Canadian dollar were also affected by the fall in oil prices.

In Tokyo trading as of 9:52 am, the USD/CAD was trading higher at C$1.2503, a gain of 0.08%; the pair has ranged from C$1.24815 to C$1.25082. Continuing to look at commodity-linked assets, the AUD/USD was lower at $0.7739, down 0.2179%, off the session peak of $0.77751, while the NZD/USD was down at $0.7153, a loss of 0.1424%.


BOJ Monetary Policy Decision Eyed

Later today, market players will focus on the Bank of Japan’s policy decision. While analysts expect that the BOJ will maintain interest rates at existing levels, there is some expectations as regards its stimulus efforts. Moreover, according to some economists, the Japanese central bank is expected to make some adjustments to an explicit band which will allow more flexibility in bond yields around the bank’s 0% target. The hope is that that will alleviate some of the strains that the low interest rate environment has had on the profit margins of Japan’s financial institutions. Currently, the USD/JPY pair is trading higher at 109.0800 yen, a gain of 0.13%.

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