Forex - Yen strengthens after BOJ assurance on economic recovery

Investing.com – The Japanese yen was stronger against the dollar on Wednesday after the Bank of Japan board said the economy continued to recover moderately and it would hold policy steady.

The BoJ voted unanimously to keep its policy target unchanged, but said there is "a high degree of uncertainty concerning Japan's economy," pointing to a slow pickup in emerging and other economies as a threat to sustained domestic growth.

"The Bank of Japan will conduct money market operations so that the monetary base will increase at an annual pace of about Y60 to Y70 trillion," the BOJ said, maintaining its assessment that Japan's economy "has continued to recover moderately."

Earlier in the day, the Australian Bureau of Statistics reported that the country's consumer price index for the fourth quarter rose by 0.8% against 1.2% in the earlier quarter. The expectation was for a 0.5% quarterly increase. The year-on-year figure was 2.7% against earlier figure of 2.2% and an expectation of 2.5%.

Also the Westpac-Melbourne Institute index of Australia’s consumer confidence fell 1.7% in January signaling that retail spending will remain weak.

AUD/USD traded up 0.66% at 0.8863 while USD/JPY traded down 0.08% at 104.20.

On Tuesday the U.S. dollar traded mixed to higher against most major currencies after the International Monetary Fund hiked its 2014 global growth forecast, while expectations for further cuts to Federal Reserve stimulus programs this month also bolstered the greenback.

In revisions to its World Economic Outlook report published on Tuesday the IMF said it expects the global economy to grow by 3.7% in 2014, up from an October forecast of 3.6% growth.

The news fueled expectations for central banks to wind down stimulus programs such as bond purchases going forward, the Federal Reserve especially, as the multilateral lending institution predicted the U.S. economy to expand 2.8%, up from an October forecast of 2.6%.