He and in reached this Friday, June 16, a new minimum in 15 years against to the euroIn response to the decision of the bank of japan (BOJ) to maintain its interest rates ultra low and his forecast of a slowdown of inflation towards the end of the year.
Meanwhile, the European Central Bank (BCE), as reported by Ámbito, announced an increase in its interest rateswhich generated a significant contrast in the monetary policies from both regions.
As anticipated, the BOJ maintained its short-term interest rate target at -0.1%, along with a 0% cap on 10-year bond yields, in line with its dvd strategy.and control the yield curve. This decision caused a sharp drop in the yenwhich reached a new 15-year low of 154.70 units per euro and headed for its biggest weekly drop against the single currency in three years. Subsequently, the yen weakened 0.5%, trading at 154.43 units per euro.
euro recovery
On the other handthe euro was preparing to close its best week in seven monthsafter the ECB’s announcement to raise borrowing costs at 22-year highs and give indications of future rate hikes. This news, combined with grim economic data in the United States, led to a widespread fall in the dollar on Thursdaysince the operators reduced their bets on the level at which interest rates could reach in the country.
The euro strengthened 0.1% against the dollar, trading at $1.0951after experiencing an increase of more than 1% on Thursday and reach maximums of a month due to the increase in interest rates and the favorable outlook for the ECB. Meanwhile, the dollar index, which measures its performance against a basket of currencies, rose slightly 0.03% to 102.17 after hitting a one-month low the day before.
Interest rates in England
the pound sterling also showed strengthincreasing 0.1% against the dollar, reaching its highest level since April 2022. Traders increased their bets that the bank of england will most likely go up interest rates for the thirteenth time consecutive next week.
In summary, the monetary policy decisions of the BOJ and the ECB generated a significant impact on the foreign exchange markets, with the yen falling to 15-year lows against the euro and the euro strengthening against the dollar. The prospects for future rate hikes in the euro zone and in the The United Kingdom supported the appreciation of the euro and the pound sterlingwhile the dollar experienced a broad decline due to unfavorable economic data and reduced expectations of rate hikes in the United States.
Source: Ambito
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