The dollar faced headwinds against the yen and the euro on Tuesday after the Bank of Japan announced that its open-ended asset buying programme would not start till January 2014 and as investors cheered a stronger than expected German sentiment survey.

After a two-day policy meeting, the bank of Japan set a 2% inflation target and pledged to embark on an unlimited asset purchase programme similar to the Federal Reserve. The central bank also kept its benchmark rate unchanged at a range of zero to 0.1%.

However there was disappointment that the unlimited asset repurchase programme will not start January next year, sending the yen higher against the greenback.

The dollar traded 0.9% lower against the yen at ¥88.74 after earlier falling to a session low of ¥88.35.

The euro held its ground against the dollar at $1.3311 compared to $1.3312 on Monday after the German ZEW economic-expectations index, which measures investor sentiment, rose more than anticipated in January.

The dollar index, which measures the US currency against a basket of six others, fell to 79.892 from 80.046 on Monday.

Traders also mulled uninspiring US housing data. Existing home sales fell by 1% in December to an annualised rate of 4.94m versus expectations of 5.1m.


CJ

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