Yen strengthens after BoJ minutes

The yen strengthened in Asian trade Tuesday despite three of the nine Bank of Japan board members seeing a greater downside risk to the economy than the majority view of balanced risk, according to the minutes of the Oct. 31 policy meeting released earlier in the day.

USD/JPY traded at 101.49, down 0.19%, in a range of 101.34 - 101.73 after the minutes.

Bank of Japan board member Takehiro Sato said downside risks to weaker prices is somewhat higher than the upside, while colleague Takahide Kiuchi repeated his call for greater price target flexibly. Sayuri Shirai said attention needs to be paid to downside risks to economic activity and prices.

The Bank of Japan is aiming for sustained annual inflation at 2% by 2015 through an aggressive easing policy that is supposed to work in combination with government economic reforms.

At the meeting, the Bank of Japan board, by a unanimous vote, kept the bank's policy target unchanged as expected.

AUD/USD traded at 0.9191, up 0.32%, shrugging off remarks by Reserve Bank of Australia Deputy Governor Philip Lowe that the currency should weaken over time.

The Australian dollar could fall further in the period ahead as investments in Australia decline, but as the terms of trade is expected to remain high the exchange rate will be high on a historical basis, Lowe said in remarks at a question and answer session following a speech.

Iran's decision to rein in its nuclear ambitions enticed investors out of safe-haven yen and other positions on Monday and sparked demand for the dollar, which tends to edge lower when U.S.-Iranian tensions flare up.

Weekend talks among the U.S., Russia, China, Britain, Germany, France and Iran ended in agreement that halted advancements in Iran's nuclear program in exchange for easing economic sanctions against Tehran.

Under the terms of the agreement, Iran will stop enriching uranium beyond 5%, and neutralize its stockpile of uranium enriched beyond that point.

Tehran will also grant more access to its facilities to nuclear inspectors in exchange for no new sanctions for six months.

Iran will also receive sanctions relief worth approximately USD7 billion in trade on oil, auto and airplane parts, gold and precious metals for six months.

Trade sanctions slapped on Iran due to its alleged nuclear ambitions have taken out more than 1 million barrels of oil per day from the global market in the past two years.

World powers have accused Iran of using its nuclear program to secretly develop nuclear weapons, an assertion the country has consistently denied.

The news offset otherwise bearish data for the dollar in the U.S. housing sector that revealed pending home sales fell unexpectedly in October.

In a report, the National Association of Realtors said its pending home sales index declined by a seasonally adjusted 0.6% in October, disappointing market expectations for a 1.3% gain.

Year-on-year, pending home sales fell at annualized rate of 2.2% last month, outpacing expectations for a 1% decline after rising 2% in September.

The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was at 80.85, down 0.13%.

On Tuesday, the U.S. is to produce data on building permits, a leading indicator of future construction activity as well as a report on housing starts. The nation is also to release private sector data on consumer confidence and house price inflation.


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