Forex - USD/JPY rises on Fed rates language

Published 03/13/2012, 10:23 PM
Updated 03/13/2012, 10:25 PM
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Investing.com - The dollar rose against the yen on Wednesday after the U.S. Federal Reserve said earlier that unemployment was improving, while solid retail sales figures out of the U.S. further buoyed the dollar.

In Asian trading on Wednesday, USD/JPY hit 83.19, up 0.30%  up from a low of 82.87 and off a high of 83.21.

The pair sought to test support at 81.97, Tuesday's low, and resistance at 83.21, the earlier high.

The Federal Reserve earlier Tuesday left interest rate targets unchanged.

Not only was the Fed reasonably optimistic over the fate of the U.S. economy, the U.S. central bank made no mention of any need for extraordinary stimulus policies like quantitative easing, which are asset purchases from banks that pump dollars into the financial system and weaken the currency in exchange for price stability.

Meanwhile, the Federal Reserve separately announced that 15 out of the country's 19 banks passed recent stress tests, meaning they can hold up under duress, which further strengthened the dollar.

Also in the U.S., retail sales came in line with expectations, growing a respectable 1.1% in February from January.

The Bank of Japan is expected to continue weakening the yen, which sent the currency falling against the greenback Wednesday.

The yen, meanwhile, was down against the pound and down against the euro, with GBP/JPY rising 0.13% to 130.42 and EUR/JPY up 0.09% at 108.62.

Later Wednesday, Japan is to release government data on manufacturing activity, followed by the Bank of Japan's monthly report.

In the U.S., Federal Reserve Chairman Ben Bernanke is scheduled to speak, and markets will keep a close eye on further confirmation of existing monetary policies or hints that changes may be needed down the road.





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