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Japanese Yen Slides As BOJ Expands Lending Support For Businesses

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The Japanese yen lost ground against its major counterparts in the Asian session on Tuesday, after the Bank of Japan kept its key interest rate unchanged and and expanded the size of the coronavirus lending program to support businesses affected by the pandemic.

The Policy Board of the BoJ voted 8-1 to retain the interest rate at -0.1 percent on current accounts that financial institutions maintain at the central bank.

The bank will continue to purchase a necessary amount of Japanese government bonds without setting an upper limit so that 10-year JGB yields will remain at around zero percent.

The central bank has raised the size of the coronavirus lending program to JPY 110 trillion from JPY 75 trillion.

The yen also was weighed by the Fed announcement to begin purchases of individual corporate bonds to support market liquidity and the availability of credit for large employers.

The currency dropped against its major rivals on Monday, except the greenback.

The yen shed 0.3 percent against the greenback, touching a 6-day low of 107.64. The pair was worth 107.33 when it closed deals on Monday. The yen is seen finding support around the 109.00 mark.

The yen was down 0.6 percent at a 5-day low of 122.12 versus the euro, after rallying to 121.45 at 5:00 pm ET. The pair had finished Monday's deals at 121.53. Immediate support for the yen is likely seen around the 123.5 level.

The yen dipped to a 4-day low of 113.44 against the franc, registering a 0.3 percent fall from Monday's closing value of 113.08. Should the yen falls further, it is likely to test support around the 116.00 region.

The yen fell 0.8 percent to hit a 5-day low of 136.36 against the pound. The pound-yen pair had ended yesterday's trading session at 135.31. The yen is likely to challenge support around the 138.00 mark.

The yen declined to a 5-day low of 79.65 versus the loonie, down by 0.7 percent from yesterday's closing value of 79.08. Further drop in the yen may locate support around the 81.00 area.

The yen weakened 1.1 percent versus the aussie and 0.7 percent versus the kiwi, reaching a 6-day low of 75.09 and a 5-day low of 70.01, respectively. At yesterday's trading close, the yen was quoted at 74.27 versus the aussie and 69.49 versus the kiwi. The yen is likely to face support around 78.00 versus the aussie and 71.00 versus the kiwi, if it falls again.

Looking ahead, German ZEW economic sentiment index for June is set for release in the European session.

U.S. retail sales and industrial production for May, NAHB housing market index for June and business inventories for April will be featured in the New York session.

Federal Reserve Chairman Jerome Powell is scheduled to testify on the Semiannual Monetary Policy Report before the Senate Banking Committee in Washington DC at 10:00 am ET.

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