Bank o Japan Responsible for Weekly Losses of Yen

The past trading week was marked with several policy meetings of major central banks. The most interesting of them turned out to be the Bank of Japan meeting that resulted in a surprise cut of interest rates into negative territory. As one can expect, this resulted in a slump of the Japanese yen.

Not many market participants had expected Japan’s central bank to reduce rates, thinking that it would rather tweak its assets purchase program or implement other form of stimulus if any at all. Yet the BoJ surprised virtually everyone, announcing negative interest rates and sending the yen crashing against other most-traded currencies.

Among other important events were the meetings of the Federal Reserve and the Reserve Bank of New Zealand. The Fed issued cautious statement, making the US dollar weaker against most other currencies. The RBNZ made no changes to its policy as well, but talked about possibility of interest rate cuts in the future.

USD/JPY rallied 1.9 percent from 118.64 to 121.06 over the week. EUR/JPY climbed 2.2 percent from 128.05 to 131.15. NZD/JPY gained from 77.02 to 78.37.

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