Dollar rebounds against yen after Fed member talks of cutting bond buying

The dollar rebounded against the yen on Friday, climbing back near four-and-a-half year highs after being boosted by comments from a Federal Reserve President yesterday.

The chief of the Fed in San Francisco hinted that quantitative easing could end soon. He said that the Fed could begin reducing its monetary easing this summer and end bond purchases late this year.

Since such measures of increasing the money supply tend to weaken the dollar, any sign of tapering off these stimulus measures gives markets more confidence in buying the dollar again.

The dollar got a brief hiccup and fell yesterday on weaker than expected US economic data.

A report from the US Department of Labor showed more Americans applied for initial unemployment benefits last week, thereby raising the number by 32,000 to a seasonally adjusted 360,000. This beat expectations for an increase of 2,000 to 330,000.

Other data that dented the dollar was that the Federal Reserve Bank of Philadelphia said that its manufacturing index fell to minus 5.2 in May from April’s reading of 1.3.

USDJPY rose back to the higher end of the 102 yen range in late US trading on Thursday and held gains in Asia on Friday, close to a four-and-a-half year high.

Related Posts Plugin for WordPress, Blogger...
,

No comments yet.

Leave a Reply

You must be logged in to post a comment.