European focus: BoJ didnt support the yen [E]

The yen fell, as BoJ lifted interest rate for the first time in six years and said it would keep interest rates ``very low''.
Japan's currency fell to a two-week low as BoJ Governor Toshihiko Fukui said rates will hold for the rest of the year. Both the Federal Reserve and the European Central Bank are likely to raise their key rates further. It boosting the extra yield in dollars and euro and investors can earn over the yen.
There's nothing from the BOJ to make people increase their interest-rate expectations,'' said Michael Klawitter, a currency strategist at Dresdner Kleinwort in Frankfurt. ``The situation remains extremely to the disadvantage of the yen.'
Rates will stay low and there is no reason to buy the yen, - said Daisuke Uno, Sumitomo Mitsui Banking Corp. ?лCurrent rate gain is pricing now. Therefore, the yen is under pressure.
The central bank last raised interest rates in August 2000, only to cut them back seven months later to almost zero percent as an Internet-led global economic boom faltered. This allowed the government to accuse it of a monetary policy mistake.
BoJ has been under pressure from officials. Finance Minister Sadakazu Tanigaki said today the bank should support the economy with its monetary policy.
Yens popularity fell, - said Sean Callow, Westpac Banking Corp. Its likely only rate increase isnt enough for yen gain.
The Fed has raised its benchmark 17 straight times to 5.25%. ECB has lifted its rate three times since December to 2.75%, encouraging Japanese investors to seek higher yields abroad.
Expectations of industry reports on retail sales and consumer confidence support the dollar today. If forecasts will be justified talks will amplify that Fed will lift its benchmark on August meeting.
The market awaits U.S. retail sales today. The market is observing not only inflation data, but also economic growth. In this connection, retail sales data will be more important-. noted Sue Trinh, RBC Capital Markets. If data will surpass forecasts, we can see dollars gain.
Analyst believes, the dollar may increase to $1.2667 versus the euro and to Y116.70 against the yen