Bank of Japan Leaves Rates Unchanged, But Plan on Normalizing Rates in Months to Come

The Japanese Yen crosses are all up strongly today following the Bank of Japan?s decision to leave interest rates unchanged. Comments from Governor Fukui suggest that the only thing holding the central bank back from raising rates is the problems in the global financial markets.

They still feel that it is wrong to keep interest rates at such low levels. In the words of Fukui, "distortions and the misallocation of resources could occur if interest rates are kept at levels inconsistent with the economy. They are not ruling out the continual normalization of interest rates even if the liquidity remains a problem globally. The market?s appetite for risk will continue to drive the movement in the Yen crosses. The sharp rally in the Nikkei overnight played a big role in driving pairs like USD/JPY, GBP/JPY and AUD/JPY higher. If the Nikkei continues to rise tonight, then we can expect USD/JPY to take another stab at 117.00.