By Sara Sjolin, MarketWatch , Hiroyuki Kachi
The pound climbed on Tuesday after Bank of England Governor Mark Carney said he'll stay at the helm until 2019, removing any uncertainty about whether he would leave in 2018.
Meanwhile, the yen weakened slightly against the dollar after the Bank of Japan's widely expected decision to stand pat at its policy meeting.
The pound extended Monday's rally, climbing to $1.2253. The rise came after BOE boss Mark Carney said he will remain in his post until June 2019, but won't serve a full eight-year term until 2021. Sterling traded at $1.2242 late Monday in New York.
The extension means Carney will stay in office through the U.K.'s Brexit process, which "should help contribute to the securing of an orderly transition to the U.K.'s new relationship with Europe," he wrote in a letter to Chancellor of the Exchequer Philip Hammond.
"We think it is positive as it removes some uncertainty about Carney staying throughout the two years of Brexit negotiations under Article 50," analysts at Danske Bank said in a note.
The U.S. dollar was changing hands at Yen105.08 compared with Yen104.81 late Monday in New York.
The greenback gained only moderately against the Japanese currency after the BOJ decided to hold off expanding stimulus (http://www.marketwatch.com/story/bank-of-japan-lowers-inflation-outlook-holds-off-on-more-stimulus-2016-10-31). As widely expected, the central bank's board voted to keep its new anchor for 10-year government bond yields at zero, while leaving its target for a short-term interest rate on some commercial bank deposits at minus 0.1%. Instead, the bankpushed back its forecast date for hitting 2% inflation to around fiscal 2018. Previously, the bank said it would reach its target in fiscal 2017. The Japanese fiscal year ends in March.
The yen had often strengthened after the BOJ's inaction, as such a move prompted speculative non-Japanese players to quickly unwind their bets on a weaker yen on hopes for more easing from the central bank. But this time, the BOJ was widely expected to stand pat, thus giving only a limited room for the yen to move higher.
Tokyo stocks gained after the policy decision, with the Nikkei Stock Average up 0.1%, helping brighten the market mood and causing some yen selling.
"[The BOJ decision] was in line with market expectations," said Akira Moroga, manager of forex products group at Aozora Bank. Still, the BOJ's yield curve control framework at a time when the Federal Reserve is moving closer to raising rates "still looks accommodative," said Moroga.
The dollar, however, dropped against most other major currencies, taking the ICE Dollar index down 0.2% to 98.284.
The Australian dollar rose to intraday highs of $0.7674 from $0.7608. The Reserve Bank of Australia held interest rates steady (http://www.marketwatch.com/story/australias-central-bank-keeps-rates-unchanged-2016-10-31) at a record-low 1.50% Tuesday, holding off from further action as policymakers balance concerns over tepid inflation and a mixed local jobs market with fears about an overheating property market.
In other currency trade, the euro was at $1.0992 from $1.0981 late Monday in New York.
(END) Dow Jones Newswires
November 01, 2016 05:12 ET (09:12 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.