The yen gained as the Bank of Japan held policy steady, though it downgraded its inflation outlook.
As expected the Bank of Japan held policy steady but noted the market volatility has dented confidence and the price views of consumers and business. At the January meeting, the BOJ lowered the rate it charges to commercial banks that park excess reserves at the central bank to negative 0.1% in a move aimed at helping its economy stave off threats of deflation. The BoJ is ostensibly hoping to keep the yield curve as low as possible in order to assist the government with financing issues by making public sector debt more affordable.
Earlier, the Reserve Bank of Australia releases monetary policy meeting minutes from its March review at which it held steady at a record low 2.0%, and confirmed it had room to cut rates further if needed.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted fell 0.03% to 96.57.
Overnight, the dollar remained broadly higher against the other major currencies on Monday, as investors continued to focus on the Federal Reserve’s upcoming policy meeting this week.
The single currency remained under pressure after the European Central Bank cut interest rates across the eurozone to new record lows and boosted its quantitative easing program last Thursday.
The ECB cut its benchmark interest rate to a record-low of zero from 0.05% and boosted its quantitative easing program by €20 billion per month to €80 billion, starting in April.
The Fed is not widely expected to raise interest rates at the conclusion of its meeting on Wednesday, given recent signs of weakness in the global economy.
But the U.S. central bank was likely to signal that rates will rise fairly soon as long as U.S. inflation and jobs continue to strengthen.