The U.S. dollar edged lower against the yen throughout morning trading today, following a drop in risk taking ahead of a key announcement from the Bank of Japan (BOJ). Investors are cautiously awaiting a decision on whether the BOJ will intervene to limit yen growth. Japan is an export driven economy, meaning a strong yen limits the volume the country is able to sell. USD/JPY, currently trading around the 86.85 level, is still fairly close to the 7-month low the pair hit last week. The greenback appears to be fairing slightly better against the euro. EUR/USD has dropped some 100 pips since this morning, and is currently trading around the 1.2900 level.

In addition to the BOJ statement, traders will want to pay attention to the U.S. Building Permits report at 12:30 GMT as well as the Bank of Canada Rate Statement at 13:00 GMT. The U.S. economy has seen a string of negative news events over the last few weeks. Should the new building permits number come in above the forecasted 0.57M, the greenback could stage an afternoon rally against the yen. Analysts are predicting the Bank of Canada to raise overnight rates from 0.50% to 0.75%. If true, the loonie will likely see some gains against its main counterparts in afternoon and evening trading.

Dollar and Euro Strengthen Despite Negative News

In a light trading day, the dollar was higher against most of the majors, with the lone exception being the euro. Risk aversion was lower as traders shrugged off the downgrade of Ireland's credit rating as U.S. equities finished higher despite negative housing data from the U.S. economy.

Summary

USD - Greenback Rises with Equities

EUR - Moody's Downgrades Ireland's Sovereign Debt

JPY - Potential Intervention by the Bank of Japan?

Crude Oil - Spot Crude Oil Flirts with 200-Day Moving Average

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After several weeks in which the Dollar appreciated repeatedly against the Euro, the Euro is showing its first signs of recovery. The rising risk appetite in the market is the main reason for the strengthening Euro, but will it continue?

Summary

USD - Dollar Weakens As Risk Appetite Soars

EUR - Euro Rallies as Stocks Continue To Rise

JPY - Yen Drops against the Majors; BOJ Leaves Rates At 0.10%

OIL - Crude Oil Rises Above $77 a Barrel

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