(RTTNews) - The dollar went back on the defensive Tuesday morning after the Bank of Japan unexpectedly lowered its key interest rate to zero in hopes of jump starting the nation's economy.
The Japanese also announced they would put in place a 5 trillion yen ($60 billion) asset purchase program to buy up government bonds, treasury bills and corporate bonds.
"The central outlook for the economy, and prices, have worsened more than had initially been predicted," Masaaki Shirakawa, the governor of the Bank of Japan, said after a two-day policy meeting.
If the move was intended to weaken the unusually strong yen against the dollar, it had virtually no impact.
The dollar slipped back to Y83.30, edging closer to a 15-year low of 82.86 set earlier this month. The markets seem to be betting the Federal Reserve will announce an aggressive round of quantitative easing by year's end, at the latest.
With risk appetite picking up on the BoJ move, the dollar also weakened against the euro. The buck erased its gains from the previous session by slipping to $1.3780, and remains close to a sixth month low of $1.3805 set over the weekend.
Eurozone retail sales fell 0.4% in August from July, Eurostat said on Tuesday. Economists had expected retail sales to grow 0.2%, following a 0.1% rise in July.
Growth of business activity in the Eurozone private sector slowed to a seven-month low at the end of the third quarter, survey data from Markit Economics showed Tuesday.
The final composite output index dropped to 54.1 in September from 56.2 in August.
The dollar managed gains against the aussie after Australia's central bank left rates unchanged at 4.5%, defying expectations for a rate hike. The buck improved to a weekly high of 0.9540 before leveling off.
Looking ahead to today's economic news from the US, the Institute for Supply Management, or ISM, will release the results of its non-manufacturing survey at 10.00 a.m. ET. Economists expect the non-manufacturing index to increase to 51.8 for the month from 51.5 reported for August.
Friday's jobs monthly jobs report is expected to shed significant light on the troubling employment situation in the US.
by RTT Staff Writer
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