Aussie Posts Gains as Bank of Japan Boosts Liquidity

The Australian dollar climbed today, reaching a monthly high versus its US counterpart, after the stimulating measures of the Bank of Japan boosted commodities and global stocks. The currency was down against the yen, though.

The BoJ eased its monetary policy today, adding liquidity to markets. As Kathy Lien, a director of currency research at GFT Forex, commented:

The only reason why we’re seeing a bit of an upward move in risk is because the Bank of Japan eased, so more liquidity is funneling into the market. The tremendous amount of liquidity that central banks are providing is the only thing supporting risk.

Indeed, markets reacted positively to the action of Japan’s central bank. The MSCI World Index of shares climbed 0.5 percent, while the Thomson Reuters/Jefferies CRB Index of commodities advanced 0.7 percent. The Aussie gained against most of its major peers as the result of positive market sentiment, but quickly erased gains versus the currency of Japan itself.

USD/JPY climbed from 1.0387 to 1.0471 as of 20:53 GMT today, while the daily maximum of 1.0474 was the highest since March 27. EUR/JPY was down from 1.2728 to 1.2652. AUD/JPY retreated from 84.06 to 84.00 after it reached the high of 84.49.

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