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Yesterday the dollar gained against the euro and the yen as the Federal Reserve policy makers raised their assessment of the economy as the labor market gathers strength and refrained from more actions to lower borrowing costs. The Federal Open Market Committee, which met in Washington, kept the central bank’s benchmark interest rate target unchanged at zero to 0.25 percent, where it’s been since December 2008. Retail sales in the U.S. rose in February by the most in five months, reflecting broad-based gains that indicate the world’s largest economy is picking up even as gasoline costs climb.
The yen dropped earlier to the weakest level against the dollar in almost 11 months as the Bank of Japan plans to keep using monetary policy as a tool to tackle deflation. The yen weakened earlier after Bank of Japan Governor Masaaki Shirakawa indicated the central bank will keep using monetary policy as a tool to tackle deflation. Shirakawa and his board members kept the benchmark interest rate between zero and 0.1 percent, the central bank said in a statement. Policy makers left the bank’s asset-purchase fund at 30 trillion yen ($360 billion) after unexpectedly boosting bond buying by 10 trillion yen at the Feb. 14 meeting. The measures contributed to weakening the yen and helped boost stocks, Shirakawa told reporters in Tokyo.
EUR/USD: yesterday the pair fell, updated a month's low.
GBP/USD: yesterday the pair rose, closed day above $1.5700.
USD/JPY: yesterday the pair rose, updated year’s high.
On Wednesday EMU data at 1000GMT includes industrial output, which is expected to rise 0.6% m/m but fall by a reading of -1.1% y/y and also the final HICP data for February, which should come in at 2.7% y/y (0.5% m/m). UK labour market data is due at 0930GMT and is expected to show the rise in unemployment slowing with a claimant count of 5k and an unchanged unemployment rate. US data starts at 1100GMT with the weekly MBA mortgage applications data. At 1230GMT, US data includes the Current Account and Import/Export Price Index. The weekly EIA Crude Oil Stocks is due at 1430GMT.
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