Forex – Dollar Falls to Day’s Lows against Yen, Reversing Early Gains

© Reuters. Dollar falls to day’s lows against yen, reversing early gains – The dollar fell to the day’s lows against the yen on Tuesday, reversing earlier gains that came after the head of the Bank of Japan said it remained fully committed to monetary easing and was not about to scale back stimulus.

was down 0.47% at 110.38 by 08:39 AM ET (13:39 GMT), not far off its four-month low of 110.18 set last Wednesday.

The yen had weakened earlier in the session after BoJ Governor Haruhiko Kuroda said there is still some distance to reach the banks 2% inflation target and that the bank has not yet reached the stage of thinking about how to handle an exit from its ultra-loose monetary policy.

The BoJ kept policy on hold on Tuesday, with interest rates at minus 0.1% and a cap on ten-year bond yields at about zero.

The bank also kept its economic forecasts unchanged, predicting inflation of 1.4% in the year to March 2019. It was the first time since 2014 that the BoJ updated its economic forecasts without lowering its inflation outlook.

Kuroda’s remarks dampened speculation that the BoJ will soon follow the European Central Bank and the Federal Reserve towards an exit from monetary easing.

The yen had strengthened after the BoJ adjusted its bond purchasing program earlier in January, purchasing fewer long-term bonds.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, was little changed for the day at 90.14, within striking distance of its three-year low of 89.96 set on Friday.

The euro was steady against the dollar, with at 1.2262, still in sight of last Wednesday’s three-year peaks of 1.2322.

Demand for the single currency continued to be underpinned ahead of the ECB’s meeting on Thursday, which could provide insight into future shifts in monetary policy.

Sterling was lower, with losing 0.14% to trade at 1.3964, not far from an overnight high of 1.4002, which the strongest level since Britain’s vote to exit the European Union in June 2016.

Sterling was boosted by hopes that Britain will reach a favorable Brexit deal.

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