US dollar was losing ground for a second consecutive day against the Japanese yen on Tuesday, as speculation appeared that Federal Reserve Banks stimulus program will remain in place for longer, as US economic growth was still not sufficiently strong.
USD/JPY fell to a session low at 99.57 at 1:55 GMT, after which consolidation followed at 99.72, losing 0.27% for the day. Support was likely to be found at November 14th low, 99.14, while resistance was to be encountered at November 18th high, 100.36.
The greenback has been under pressure after Federal Reserve Chair-nominee Janet Yellen said in front of the Senate Banking Committee on Thursday last week that as US economy was beginning to show progress, rates of inflation and unemployment still have more room to approach central bank’s targets. Markets considered such comments as rather dovish, as it seemed Fed policymakers wanted further solid proof of economic improvement before making a move towards reduction of monthly asset purchases.
This Thursday the Senate Banking Committee is expected to vote on Yellens nomination as head of the Federal Reserve Bank.
US dollars retreat was held in check, also following the comments made by the Federal Reserve Bank of New York President William Dudley on Monday. “While growth in 2013 has been disappointing, I believe a good case can be made that the pace of growth will pick up some in 2014 and then somewhat more in 2015,” Dudley said. “As growth picks up, I expect to see more substantial improvement in labor market conditions.”
Experts project that the Federal Reserve will postpone the scale back of its asset purchases until March next year, even following the report, which showed that non-farm payrolls in the United States rose more than expected in October. Policymakers will probably reduce the monthly pace of stimulus to 70 billion USD at their policy meeting on March 18th-19th from the current pace of 85 billion USD, according to the median estimate of 32 economists in a survey.
“The U.S. dollar has been under pressure right across the board,” said Emma Lawson, a Sydney-based senior currency strategist at National Australia Bank Ltd., cited by Bloomberg News. “Certainly, the doves are taking the fore at the moment. Most investors have moved away from any expectation of tapering in December.”
Investors’ focus was now set upon the release of the minutes of Fed’s monetary policy meeting, held on October 30th-31st, as it may provide clues over the future course of the above mentioned matter.
Meanwhile, Bank of Japan Governor Haruhiko Kuroda and his team will conduct a two-day meeting on policy, starting on Wednesday, as almost three-quarters of respondents in another Bloomberg survey forecast that the central bank will introduce additional stimulus measures during the first six months of 2014.
In addition, Chinas largest package of economic reforms since the 1990s, including expanded private investments in state-controlled sectors of the economy and expanded land rights for farmers, was still influencing overall market sentiment, as this may lead to a higher confidence among business entities in the country.
Elsewhere, the yen was gaining against the euro, with EUR/JPY cross down 0.22% on a daily basis to trade at 134.77 at 10:20 GMT. GBP/JPY pair was losing 0.27% to trade at 160.69 at 10:21 GMT.
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