The pair is likely to trade with a firm undertone today in Asia amid speculation that the Bank of Japan, under the governorship of the new chief Haruhiko Kuroda, will accelerate monetary easing. The Nikkei news agency reports that Kuroda will announce a policy shift to quickly achieve the 2% inflation target at his first press conference on Thursday.
The new governor is expected to pledge that under his leadership the BOJ will pursue "bold monetary easing both in terms of quantity and quality," and consider buying Japanese government bonds that mature in five years instead of the current three-year period as well as launching early so-called open-ended easing, or asset purchases with no set end date, the news report said.
Investors will also focus on developments in Cyprus. The Cypriot government rejected a levy on bank accounts to partially fund a bank bailout and is now in talks with the Russian government and formulating a new plan to present to its European Union partners reportedly on Thursday. Cyprus bank are closed and will remain so until Tuesday. Monday is a bank holiday.
The Cyprus bank closure and potential default of the two largest banks on the island had little effect on worldwide equity, currency or credit markets today. But the implications for the debt crisis in Europe and risk sentiment on the global financial markets could rise depending on the outcome of the crisis.
MNI & WWM