Dollar eases on uncertainty over BOJ, Fed policy

German 10-year bond yields – the bloc’s benchmark – rose 2 basis points to 0.05 percent on Wednesday, having climbed as high as 0.09 percent in early trades. This reduced total gains this year to 8.5 percent. Losers outnumbered gainers, 110 to 67, while 50 issues were unchanged. It will also retain its 2% inflation target.

NEW YORK, Sept 14 (Reuters) – The U.S. dollar eased from an eight-day high against the yen on Wednesday after skepticism grew that the Bank of Japan would intensify its stimulative monetary policies next week, while uncertainty about Federal Reserve policy pressured the greenback against other currencies.

The Bank of Japan will hold a two-day policy meeting starting September 20. The New Zealand dollar was last 0.5 percent higher against the dollar at $0.7291 after hitting a more than one-week low of $0.7235 Tuesday.

The gatherings come at a time of increasing anxiety that central bankers are considering winding back on years of cheap cash that have helped fuel a rally in global equities. This is based on our view that the Fed is likely to raise interest rates by 25bp in December.

The dollar rose to 103.02 yen in Tokyo from 102.59 yen in NY late Tuesday, while the euro bought 115.62 yen against 115.07 yen.

With BoJ officials tasked with delivering a “comprehensive assessment” next week, the majority may lean towards retaining the status quo as the central bank continues to evaluate the impact of the negative-interest rate policy (NIRP) on the real economy. “Markets had become dangerously reliant on central bank support and this is a bit of a wake-up call that this won’t always be the case”.

The Nikkei business daily reported that the BOJ plans to make its controversial negative interest rate policy the centerpiece of future monetary easing, promising to weigh further cuts as expansions to asset buying near their limits. The city’s Nikkei index ended 0.7 percent lower. But when the BOJ shocked markets in January by cutting rates below zero for the first time in an attempt to weaken the currency, the yen reaction was only temporarily – and since then it has gained nearly 20 percent. The euro rose to 115.00 yen from 115.07 yen.