Investing.com - The dollar eased back from two month highs against the yen on Wednesday, but continued to remain supported amid expectations that the Federal Reserve will soon start tapering stimulus, while the pound was higher after the Bank of England’s inflation report and upbeat U.K. jobs data.
During European afternoon trade, USD/JPY slid 0.32% to 99.31, below the two month high of 99.79 struck on Tuesday.
Last week’s stronger than forecast U.S. nonfarm payrolls report heightened expectations that the Fed could start to scale back its USD85 billion-a-month asset purchase program before the end of this year.
Investors were turning their attention to Thursday’s Senate hearing to confirm Janet Yellen as the first chairwoman of the Federal Reserve, for indications on the future course of U.S. monetary policy.
The euro was slipped lower against the dollar, with EUR/USD edging down 0.11% to 1.3422.
In the euro zone, data released on Wednesday showed that industrial production fell 0.5% in September from a month earlier, but was 1.1% higher on a year-over-year basis. Economists had forecast a monthly decline of 0.3% and an annual increase of 0.2%.
Meanwhile, official data showing that the annual rate of inflation in Spain fell by 0.1% in October added to fears over growing deflationary pressures in the euro area. The downward trend in inflation prompted the European Central Bank to cut rates to a record low 0.25% last week.
Elsewhere, the dollar was close to session lows against the pound, with GBP/USD advancing 0.43% to 1.5971, after rising as high as 1.6002 earlier.
Sterling strengthened after the Bank of England brought forward the date it expects the unemployment rate to hit the 7% threshold at which it will consider raising rates and revised up its forecast for growth in its quarterly inflation report.
The BoE said the unemployment rate will fall faster than it expected three months ago. BoE Governor Mark Carney said there is a "two in five chance" that it could be 7% at the end of 2014.
The bank reiterated that the unemployment rate falling below 7% would not automatically trigger an increase in interest rates.
The BoE said it now expects economic growth of 1.6% this year, up from 1.4% in August and growth of 2.8% in 2014, up from 2.5%. The bank still expects growth of 2.3% in 2015.
The pound received an additional boost after official data on Wednesday showed that the number of people claiming unemployment benefits in the U.K. fell more than expected in October.
The U.K. unemployment rate ticked down to 7.6% in the three months to September. Economists had expected the rate of unemployment to remain unchanged at 7.7%.
The dollar was almost unchanged against the Swiss franc, USD/CHF edging up 0.03% to 0.9176.
The greenback was slightly lower against the Australian, New Zealand and Canadian dollars, with AUD/USD edging up 0.12% to 0.9311, NZD/USD rising 0.22% to 0.8239 and USD/CAD dipping 0.09% to 1.0484.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up 0.01% to 81.22.
During European afternoon trade, USD/JPY slid 0.32% to 99.31, below the two month high of 99.79 struck on Tuesday.
Last week’s stronger than forecast U.S. nonfarm payrolls report heightened expectations that the Fed could start to scale back its USD85 billion-a-month asset purchase program before the end of this year.
Investors were turning their attention to Thursday’s Senate hearing to confirm Janet Yellen as the first chairwoman of the Federal Reserve, for indications on the future course of U.S. monetary policy.
The euro was slipped lower against the dollar, with EUR/USD edging down 0.11% to 1.3422.
In the euro zone, data released on Wednesday showed that industrial production fell 0.5% in September from a month earlier, but was 1.1% higher on a year-over-year basis. Economists had forecast a monthly decline of 0.3% and an annual increase of 0.2%.
Meanwhile, official data showing that the annual rate of inflation in Spain fell by 0.1% in October added to fears over growing deflationary pressures in the euro area. The downward trend in inflation prompted the European Central Bank to cut rates to a record low 0.25% last week.
Elsewhere, the dollar was close to session lows against the pound, with GBP/USD advancing 0.43% to 1.5971, after rising as high as 1.6002 earlier.
Sterling strengthened after the Bank of England brought forward the date it expects the unemployment rate to hit the 7% threshold at which it will consider raising rates and revised up its forecast for growth in its quarterly inflation report.
The BoE said the unemployment rate will fall faster than it expected three months ago. BoE Governor Mark Carney said there is a "two in five chance" that it could be 7% at the end of 2014.
The bank reiterated that the unemployment rate falling below 7% would not automatically trigger an increase in interest rates.
The BoE said it now expects economic growth of 1.6% this year, up from 1.4% in August and growth of 2.8% in 2014, up from 2.5%. The bank still expects growth of 2.3% in 2015.
The pound received an additional boost after official data on Wednesday showed that the number of people claiming unemployment benefits in the U.K. fell more than expected in October.
The U.K. unemployment rate ticked down to 7.6% in the three months to September. Economists had expected the rate of unemployment to remain unchanged at 7.7%.
The dollar was almost unchanged against the Swiss franc, USD/CHF edging up 0.03% to 0.9176.
The greenback was slightly lower against the Australian, New Zealand and Canadian dollars, with AUD/USD edging up 0.12% to 0.9311, NZD/USD rising 0.22% to 0.8239 and USD/CAD dipping 0.09% to 1.0484.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up 0.01% to 81.22.