Investing.com – The yen fell to fresh seven year lows against the dollar on Thursday and hit a six year trough against the euro as the Bank of Japan’s decision to expand its easing program last month continued to pressure the currency lower.
USD/JPY hit highs of 118.98, the most since August 2007 and was last up 0.76% to 118.82.
Demand for the dollar continued to be underpinned after the minutes of the Federal Reserve’s latest meeting indicated that officials believe the economic recovery is strong enough to withstand external threats to growth, but offered little additional clarity about when rates could start to rise.
Markets are currently expecting the U.S. central bank to start raising rates sometime around September 2015. In contrast, the BoJ is expected to continue monetary easing in order to shore up growth and inflation.
The yen remained under heavy selling pressure after Japan’s prime minister announced plans this week to delay a sales tax hike due to take place next year, after an increase in April played a part in pulling Japan into a recession.
He also called elections for December, to seek a fresh mandate for his economic policies, which call for a weaker yen.
EUR/JPY hit highs of 149.14, the strongest since October 2008, and was last up 0.52% to 148.82.
The euro’s gains came despite heightened expectations for additional easing measures by the European Central Bank, which has so far held back from sovereign debt purchases.
Investors were looking ahead to surveys of the euro zone private sector later in the day, after data last week showed that the region’s economy grew slightly more than expected in the third quarter, with Germany narrowly avoiding a recession.
Data released earlier Thursday showed that China’s HSBC manufacturing purchasing managers’ index fell to a six-month low of 50.0 this month from a final reading of 50.4 in October and well below the 50.3 forecast by economists.
The weak data added to gloom over the outlook for the global economy.
Elsewhere, the euro was slightly lower against the dollar, with EUR/USD sliding 0.13% to 1.2535.
The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.21% to 87.86, not far from last week’s more than four-year highs of 88.36.