USD/JPY trades steadily after Bernanke’s statement, Japanese trade balance data

Having retreated to daily lows during Wednesdays Asian session, following Fed Chairman Ben Bernankes comments regarding interest rate outlook in the United States and after a report showed Japanese trade deficit widened in October, USD/JPY cross managed to regain certain ground.

USD/JPY fell to a session low at 99.94 at 2:35 GMT, after which consolidation followed at 100.09, dipping 0.05% for the day. Support was likely to be received at November 19th low, 99.57, while resistance was to be met at November 19th high, 100.25.

Federal Reserve Bank Chairman Ben Bernanke said that central bank’s benchmark interest rate will probably be maintained closed to zero for a “considerable time” after bond purchases end. The labor market in the United States has demonstrated “meaningful improvement”, since the Federal Reserve’s monetary stimulus program started, Bernanke said in remarks prepared for a speech to economists in Washington on Tuesday, Bloomberg imparted. A “preponderance of data” would be needed in order to begin removing accommodation, according to banks Governor. The benchmark interest rate may remain at low levels “perhaps well after” the rate of unemployment in the country falls below Fed’s objective of 6.5%.

These remarks echoed statements made by other Fed policymakers. Federal Reserve Chair-nominee Janet Yellen said in front of the Senate Banking Committee on November 14th, 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 officials wanted further solid proof of economic improvement before making a move towards reduction of monthly asset purchases. Federal Reserve Bank President for New York William Dudley said on November 18th, that he was “getting more hopeful” about economic development, while also signaling no change in stimulus anytime soon.

“Bernanke and Yellen remain very consistent with each other that rates in the U.S. are going to remain low for a long time,” said Thomas Averill, a managing director in Sydney at Rochford Capital, cited by Bloomberg. “I do think the story is dollar weakness. I would say sell the U.S. dollar across the board.”

Fed policymakers will probably trim the scale of bond purchases to 70 billion USD per month from the current 85-billion-USD monthly pace at the policy meeting on March 18th-19th, a survey has already shown.

Later in the day the Department of Commerce will probably report that retail sales in the United States rose 0.1% in October, following a 0.1% decrease in the previous month, according to the median estimate of economists. Retail sales provide important clues regarding consumer spending trend and nations economic development as a whole. Better than forecast result may certainly heighten the appeal of the US dollar.

Meanwhile, the Japanese yen briefly increased losses, after earlier on Wednesday it became clear that nations trade balance registered a wider deficit than projected in October. Seasonally adjusted trade balance produced a deficit at the amount of 1.073 trillion JPY in October, as during September the deficit figure has been revised down to 1.128 trillion JPY from 1.091 trillion JPY previously. Experts had anticipated a deficit of 0.876 trillion JPY in October. Japans exports climbed 18.6% in October 2013 compared to October 2012, reaching 6.105 trillion JPY and marking an eighth consecutive monthly increase. It was expected that the figure will rise 17.3% in October, after in September it advanced 11.5%. October was the 16th consecutive month, during which Japan forms a deficit on its trade balance, or the longest sequence ever recorded.

In addition, Japanese all industries activity index, which tracks 11 industries in the country, advanced 0.4% in September on a monthly basis, in consonance with preliminary estimates, after another 0.3% gain in August.

Bank of Japan Governor Haruhiko Kuroda and his team are expected to begin a two-day policy meeting today, as almost three-quarters of respondents in another survey by Bloomberg project that the central bank will introduce additional stimulus during the first six months of 2014.

Elsewhere, the yen was trading higher against the euro, with EUR/JPY cross down 0.15% on a daily basis to trade at 135.38 at 8:16 GMT. Earlier the pair reached its highest point since October 2009 at 135.95. GBP/JPY pair was little changed, gaining 0.04% for the day to trade at 161.51 at 8:18 GMT.