(From Wall Street Journal / Source link: http://online.wsj.com/article/BT-CO-20101119-700286.html)
By Kosaku Narioka Of DOW JONES NEWSWIRES TOKYO (Dow Jones)
The U.S. dollar fell against the yen in Asia Friday from a fresh six-week high hit overnight in New York, after Federal Reserve Chairman Ben Bernanke mounted a strong defense of the Fed's easy-money policies. In remarks prepared for delivery Friday in Frankfurt, Bernanke showed his resolve to continue with the Fed's second round of quantitative easing.
"On its current economic trajectory the United States runs the risk of seeing millions of workers unemployed or underemployed for years," Bernanke said. "As a society, we should find that outcome unacceptable." Bernanke's remarks followed comments by other Fed officials who supported the easing steps to stimulate the U.S. economy.
Minneapolis Federal Reserve Bank President Narayana Kocherlakota, who was presumed to be uncomfortable with the Fed's recent decision to buy $600 billion in longer-dated Treasurys, said late Thursday, "I did express support for the decision at the recent meeting (of the Federal Open Reserve Committee)." Foreign exchange participants sold the dollar in reaction, pushing it lower. "Although some recent U.S. economic indicators turned out to be stronger than expected, comments from Fed officials have given the reassurance that the Fed is going to implement the QE2 just as it announced," said Satoshi Tate, senior vice president of the foreign exchange division of Mizuho Corporate Bank. Tate said the dollar will likely weaken against other major currencies, and the greenback may fall close to Y80.00 in the near term, just above its all-time low of Y79.75. Another senior foreign exchange dealer at a major Japanese bank said Bernanke's remarks that China is hurting the world economy by preventing its currency from rising indicates continued desire for the dollar to weaken versus the Chinese yuan, which in turn could hurt the greenback versus the yen. The dealer said the dollar could fall to around Y83.00 later in the global day although the accumulation of buying orders at that level is likely to prevent any further decline. As of 0450 GMT, the dollar was at Y83.48 from Y83.51 late New York Thursday, while the euro was at Y113.76 from Y113.82. Against the dollar, the euro was at $1.3631, unchanged from late Thursday. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 78.626 from 78.635. Mizuho's Tate also said there is a growing view that the dollar's recent rising trend against major currencies may have ended Tuesday when the euro fell to $1.3446 as risk appetite returned, prompting investors to buy stocks, commodities and riskier currencies. But rises in such currencies have so far been moderated by continuing concern over European sovereign debt and the view that the Chinese authorities may soon tighten monetary policy, which may cool down the heated engine of global growth. Tate said the appetite for risk may not increase very much because "players will likely be less willing to take risk toward the end of the year" as they close their books to lock in profits.
"On its current economic trajectory the United States runs the risk of seeing millions of workers unemployed or underemployed for years," Bernanke said. "As a society, we should find that outcome unacceptable." Bernanke's remarks followed comments by other Fed officials who supported the easing steps to stimulate the U.S. economy.
Minneapolis Federal Reserve Bank President Narayana Kocherlakota, who was presumed to be uncomfortable with the Fed's recent decision to buy $600 billion in longer-dated Treasurys, said late Thursday, "I did express support for the decision at the recent meeting (of the Federal Open Reserve Committee)." Foreign exchange participants sold the dollar in reaction, pushing it lower. "Although some recent U.S. economic indicators turned out to be stronger than expected, comments from Fed officials have given the reassurance that the Fed is going to implement the QE2 just as it announced," said Satoshi Tate, senior vice president of the foreign exchange division of Mizuho Corporate Bank. Tate said the dollar will likely weaken against other major currencies, and the greenback may fall close to Y80.00 in the near term, just above its all-time low of Y79.75. Another senior foreign exchange dealer at a major Japanese bank said Bernanke's remarks that China is hurting the world economy by preventing its currency from rising indicates continued desire for the dollar to weaken versus the Chinese yuan, which in turn could hurt the greenback versus the yen. The dealer said the dollar could fall to around Y83.00 later in the global day although the accumulation of buying orders at that level is likely to prevent any further decline. As of 0450 GMT, the dollar was at Y83.48 from Y83.51 late New York Thursday, while the euro was at Y113.76 from Y113.82. Against the dollar, the euro was at $1.3631, unchanged from late Thursday. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 78.626 from 78.635. Mizuho's Tate also said there is a growing view that the dollar's recent rising trend against major currencies may have ended Tuesday when the euro fell to $1.3446 as risk appetite returned, prompting investors to buy stocks, commodities and riskier currencies. But rises in such currencies have so far been moderated by continuing concern over European sovereign debt and the view that the Chinese authorities may soon tighten monetary policy, which may cool down the heated engine of global growth. Tate said the appetite for risk may not increase very much because "players will likely be less willing to take risk toward the end of the year" as they close their books to lock in profits.
Interbank Foreign Exchange Rates At 00:50 EDT / 0450 GMT Latest Previous %Chg Daily Daily %Chg Dollar Rates 2150 GMT High Low 12/31 USD/JPY Yen 83.44-48 83.51-55 -0.08 83.64 83.40 -10.36 EUR/USD Euro 1.3629-31 1.3638-40 -0.07 1.3660 1.3609 -4.80 GBP/USD Sterling 1.6031-34 1.6036-39 -0.03 1.6053 1.6015 -0.82 USD/CHF Swiss Franc 0.9942-47 0.9956-63 -0.14 0.9974 0.9945 -3.98 USD/CAD Canadian Dlr 1.0204-07 1.0193-00 +0.11 1.0208 1.0181 -2.94 AUD/USD Australian Dlr 0.9857-60 0.9895-00 -0.38 0.9911 0.9845 +9.73 NZD/USD New Zealand Dlr 0.7754-61 0.7781-83 -0.35 0.7795 0.7748 +6.86 Euro Rate EUR/JPY Yen 113.73-78 113.91-96 -0.16 114.12 113.54 -14.66
By Kosaku Narioka, Dow Jones Newswires
