The yen headed weaker against the dollar in early Asia on Tuesday as the Bank of Japan gets set to unveil its latest policy views with the language on economic recovery seen as key for the currency's fortunes.
The Bank of Japan is in focus for comments on the pace of its annual ¥80 trillion in asset purchases and depth of commitment to targeting the yield curve. Governor Haruhiko Kuroda faces a communication challenge in expressing his usual confidence that inflation is headed to the central bank’s target while cooling speculation that the first step in normalizing policy is coming closer.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted down 0.38% to 90.15.
Overnight, the dollar recovered some of its losses against a basket of major currencies amid reports suggesting that the government secured enough support in the Senate to end the government shutdown.
Other currencies, however, remained firm against the greenback, curbing its rebound from lows as sterling continued its trend higher.
The euro eased from highs ahead of the European Central Bank meeting Thursday. Investor expectations for shift in the central bank's forward guidance to a more hawkish stance has eased in recent weeks.
Action Economics said it doesn’t expect major changes to the guidance as ECB president Mario Draghi is unlikely to commit to an end date for quantitative easing.
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