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Yen Rises As BOJ Keeps Policy Unchanged

EUR JPY 15 061616

The Japanese yen strengthened against the other major currencies in the Asian session on Thursday, after the Bank of Japan kept its monetary stimulus unchanged as widely expected.

Governor Haruhiko Kuroda and his board members decided by an 8-1 majority vote to hold its target of raising the monetary base at an annual pace of about JPY 80 trillion.

The board also decided to maintain the -0.1 percent interest rate on current accounts that financial institutions maintain at the bank.

The bank said the Japan's economy is likely to be on a moderate expanding trend.

Meanwhile, Asian stocks traded lower after the U.S. Federal Reserve left interest rates unchanged overnight and signaled a more gradual tightening path. Investors are also cautious on worries about the possibility of the UK leaving the European Union.

Wednesday, the yen showed mixed performance against its major rivals. While the yen rose against the U.S. dollar, it held steady against the euro, the pound and the Swiss franc.

In the Asian trading, the yen rose to a 3-1/2-year high of 117.47 against the euro and nearly a 2-year high of 104.17 against the U.S. dollar, from yesterday's closing quotes of 119.36 and 106.01, respectively. The yen is likely to find resistance around 116.00 against the euro and 103.00 against the greenback.

Against the pound and the Swiss franc, the yen advanced to near 3-year highs of 147.62 and 108.62 from yesterday's closing quotes of 150.56 and 110.25, respectively. If the yen extends its uptrend, it is likely to find resistance around 146.00 against the pound and 107.00 against the Swiss franc.

The yen climbed to nearly a 3-week high of 73.71 against the NZ dollar, from an early 3-day low of 75.05. On the upside, 72.00 is seen as the next resistance level for the yen.

Data from Statistics New Zealand showed that New Zealand's gross domestic product expanded 0.7 percent on quarter in the first three months of 2016. That topped forecasts for an increase of 0.5 percent following the 0.9 percent gain in the three months prior. On a yearly basis, GDP climbed 2.8 percent, again beating expectations for 2.6 percent and up from 2.3 percent in the three months prior.

Against the Australian and the Canadian dollars, the yen advanced to a 4-year high of 76.97 and nearly a 4-month high of 80.55 from yesterday's closing quotes of 78.51 and 82.09, respectively. The yen may test resistance around 75.00 against the aussie and 79.00 against the loonie.

Looking ahead, Swiss SECO economic forecasts is due to be released in the pre-European session at 1:45 am ET.

At 3:30 am ET, the Swiss National Bank's interest rate announcement is due. The central bank is expected to maintain the LIBOR rate at -0.75 percent.

U.K. retail sales data for May and final Eurozone CPI data for May are slated for release later in the day.

At 5:15 am ET, European Central Bank's governing council member and Austrian National Bank Governor Ewald Nowotny is expected to speak about the monetary union in Vienna.

The Bank of England will announce its interest rate decision and MPC minutes at 7:00 am ET. Economists expect the bank to retain interest rates unchanged at 0.50 percent and asset purchase target at GBP 375 billion.

At 7:45 am ET, DUBLIN - European Central Bank 's governing council member and Irish central bank Governor Philip Lane is expected to speak at Irish financial services industry representative body event in Dublin.

In the New York session, U.S. CPI data for May, U.S. weekly jobless claims for the week ended June 11, U.S. current account data for the first quarter, U.S. NAHB housing market index for June and U.S. Philadelphia Fed manufacturing index for June are set to be published.

At 4:00 pm ET, Bank of England Governor Mark Carney will deliver a speech at the Mansion House Bankers' Dinner, in London.

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