The Japanese yen continued its sharp downward slide on Tuesday, May 2, hitting its 15-year low against the euro, as the effects of the Bank of Japan's persistently dovish stance continue to weigh on the Japanese currency. The U.S. dollar added 0.21% to 137.74 per yen for the first time since March 8. A rise above 137.90 would be the highest level this year (see the chart). The signal that the Bank of Japan is not going to change its negative interest rate policy anytime soon gave speculators the green light to resume selling the yen.

According to Bloomberg, Barclays Plc (BARC.LN) and Goldman Sachs (GS) have moved their expected timing for revisions to yield-curve control — a bullish catalyst for the yen — to July from June. July is when the next BoJ outlook report (equivalent of Fed’s Dot-Plot) is due.

Meanwhile, the Australian dollar jumped to a one-week high after the Reserve Bank of Australia (RBA) surprised with a rate hike and signaled that further tightening may be coming. The central bank just raised its benchmark interest rate by 25 bps to 3.85% and some further tightening may be needed to ensure that inflation returns to target levels within a reasonable time frame.

The Australian currency instantly rose 1% to just below 67 U.S. cents for the first time since April 25 after holding near 66 cents for most of last week. The RBA may now target its key rate at 4% before committing the markets to end its cycle. It is very likely that there will be another hike, though it remains to be seen if that will happen in June.