The Japanese yen has posted gains in the Tuesday session. Currently, USD/JPY is trading at 110.33, down 0.46% on the day. On the release front, the Bank of Japan maintained interest rates at -0.10% at its policy meeting. Later in the day, Japan releases Trade Balance and Manufacturing PMI. In the US, the sole event of the day, Richmond Manufacturing Index, posted a 3-month low. The indicator slowed to 14, well off the estimate of 20 points. On Wednesday, the US releases Existing Home Sales.
As expected, the Bank of Japan held interest rates in negative territory, at -0.10%. The monetary policy statement noted that the economy should continue to show modest expansion, and that the BoE would maintain current qualitative and quantitative monetary easing until consumer inflation hits the 2 percent target. Recently, there has been talk of the BoJ tightening its policy, given the rebound in the economy. However, BoJ Governor Kuroda has taken pains to reiterate that the Bank will not be changing its ultra-accommodative monetary policy anytime soon. In a quarterly review, the BoJ made no changes to its economic and inflation projections, and reiterated its forecast that inflation will reach the 2 percent target in the 2019-2020 fiscal year.
The US government shutdown is over, after just three days. On Monday, the Senate voted 266-150 to extend funding until February 8. This stopgap measure will enable the government to provide services during that time, but the parties will still have to hammer out a longer-term agreement on funding the government. The Democrats held up a funding bill last week, in order to force the Republicans to the table over illegal immigration. The Republicans have promised to hold a vote on this issue, but many Democratic lawmakers remain skeptical that President Trump and the Republicans will deal in good faith over immigration.
