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Forex - USD/JPY higher despite tapering news

Published 09/18/2013, 10:59 PM
Updated 09/18/2013, 11:01 PM
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Investing.com - The U.S. dollar traded higher against the Japanese yen during Thursday’s Asian session despite news that the Federal Reserve has opted against trimming its USD85 billion-per-month bond-buying program.

In Asian trading Thursday, USD/JPY climbed 0.29% to 98.22. The pair was likely to find support at 97.89 and resistance at 99.97, the high of September 13.

Earlier Wednesday, the Ministry of Finance said Japan’s trade balance rose to negative JPY790 billion in August from negative JPY910 billion in July. The July figure was revised up from negative JPY940 billion. Analysts expected an August reading of negative JPY810 billion.

The Fed said it will not tapering its asset-buying program, implying it is still concerned about the sturdiness of the U.S. economy. Easing programs usually adversely impact currencies, the trade-off for bolstering economic growth.

The U.S. central bank "decided to await more evidence that progress will be sustained before adjusting the pace of its purchases," it said in a statement.

Most market participants were expecting the Fed to taper, so the surprise announcement sent U.S. stocks to record highs and that ebullience has carried over to the Asian session, but there is speculation that the carry-trade could return and that could affect the yen.

Still, there is doubt the yen will be the funding source of choice for developed market carry-trade pairs. Some traders say yen-funded carry trades could flourish only against higher-yielding emerging currencies such as the South African rand, the Mexican peso and the Brazilian real, Reuters reported.

Elsewhere, AUD/JPY rose 0.12% to 93.41 while EUR/JPY added 0.33% to 132.88.


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