The yen edged higher across the board on Friday morning in Asia following the release of the minutes of Japan's monetary policy meeting held on May 21 and 22.
The members of the Bank of Japan's monetary policy board said that the Japanese economy had finally started to move to the upside, minutes from the board's meeting revealed today.
On the matter of ending the deflation that has plagued Japan for more than 15 years, some of the board members admitted that it could be difficult to attain the bank's new inflation target of 2 percent.
"Japan's economy has started picking up," the minutes said. "Exports have stopped decreasing as overseas economies have been moving out of the deceleration phase that had continued since last year and are gradually heading toward a pick-up. Business fixed investment continues to show resilience in nonmanufacturing and appears to have stopped weakening on the whole. Public investment has continued to increase, and housing investment has generally been picking up."
At the meeting, the BoJ kept the nation's benchmark interest unchanged at 0 to 0.10 percent. It also agreed to conduct money market operations so that the monetary base will increase at an annual pace of about JPY 60 to 70 trillion.
The bank said it would continue to purchase Japanese government bonds so that the amount outstanding will increase at an annual pace of about JPY 50 trillion as planned. The purchases of JGBs are expected to put downward pressure on interest rates across the yield curve.
Elsewhere, food prices in New Zealand were up a seasonally adjusted 0.3 percent on month in May, Statistics New Zealand said today. That was in line with expectations following the 0.2 percent increase in April and the 1.3 percent decline in March. On a yearly basis, food prices dipped 0.1 percent.
New Zealand's manufacturing activity rose to its highest level in almost nine years in May, results of a survey by BNZ and Business NZ showed today. The performance of manufacturing index rose to 59.2 in May, the highest reading since June 2004, from 55.2 in April.
The yen advanced to 126.21 against the euro after the release of the minutes, improving from early Asian session's low of 128.08. The yen also climbed to 102.42 against the Swiss franc from previous low of 103.86.
The Japanese unit advanced to 148.35 against the pound and 94.42 against the US dollar from early Asian session's lows of 150.53 and 95.78, respectively.
On the upside, the yen may find target levels at 147.0 against the pound, 126.0 against the euro, 102.0 against the Swiss franc and 93.80 against the US dollar.
The yen also drifted higher against the resource-linked currencies on Friday morning, rising as high as 90.51 against the Australian dollar, 92.79 against the Canadian dollar and 76.04 against the New Zealand dollar.
Further bullish extension could help the yen challenging resistance levels at 75.50 against the kiwi, 92.0 against the loonie and 90.0 against the aussie.
Looking ahead, the UK construction output for April, eurozone's final CPI for May and employment report for the first quarter are expected in the European session.
The U.S. current account for the first quarter, PPI and industrial production-both for May and the preliminary reading of the University of Michigan's consumer confidence for June are the major economic data due out in the North American session.
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