The dollar has slipped from a one-month high earlier this month but was steady on Wednesday, December 20, after the Republican-led U.S.
The dollar last stood at 113.13 yen, up 0.2 percent on the day, having pulled away from Friday’s low of 112.035, with last week’s high of 113.75 seen as its next target.
Gains in the dollar were limited as many market players looked to the Bank of Japan’s two-day policy meeting ending on Thursday for clues to whether the BOJ will join the U.S. Federal Reserve and European central banks in winding back stimulus, Reuters reports.
Meanwhile, the euro held on to small gains on Wednesday with analysts saying that expectations of the Trump administration’s landmark U.S. tax overhaul were largely priced into the dollar.
Year-end portfolio moves and a rise in German bond yields also helped keep the euro broadly unchanged at 1.184 against the greenback. The euro was up 0.3 percent against the Japanese yen at 134.
A speech by BOJ Governor Haruhiko Kuroda in November sparked speculation of a stimulus taper when he mentioned the concept of a ‘reversal rate’ – a level at which low interest rates start to have more harmful side-effects than benefits.
“There is very strong interest in the ‘reversal rate’. Kuroda’s news conference (when the BOJ meeting ends) will be pretty much all about just that,” said Yukio Ishizuki, senior strategist at Daiwa Securities.
