Investing.com - The yen strengthened against the dollar in midday Asian trade Wednesday after remarks by Federal Reserve Chairman Ben Bernanke that suggested a tapering of the USD85 billion a month in asset purchases is dependent on a robust economic recovery.
USD/JPY traded at 100.03, down 0.11%, in a range of 99.94 - 100.23 in the wake of Bernanke's comments that included saying Janet Yellen can be expected to do all she can to ensure a "more robust recovery" if confirmed as the next Federal Reserve chief.
Bernanke, in remarks in the U.S. late Tuesday, said the Federal Open Market Committee is in agreement that USD85 billion a month in bond purchases has aided recovery and that even when tapering begins interest rates will likely remain near zero "well after" the FOMC's 6.5% unemployment threshold is crossed.
"The target for the federal funds rate is likely to remain near zero for a considerable time after the asset purchases end, perhaps well after the unemployment threshold is crossed and at least until the preponderance of the data supports the beginning of the removal of policy accommodation," he said, adding that economic data will be key for tapering purchases.
"If these views are supported by incoming information, the FOMC will likely begin to moderate the pace of purchases," he said.
AUD/USD traded at 0.9421, down 0.14%, after Reserve Bank of Australia Assistant Governor Guy Debelle said the central bank would prefer a lower exchange rate and one major way that would happen is a change in the direction of U.S. monetary policy. Separately, a revamped Westpac-Melbourne Institute leading index moved forward to October that showed a lift in expectations for non-mining segments of the economy.
Overnight, the dollar traded lower against most major currencies ahead of the release of the minutes from the Federal Reserve's October policy meeting, which investors doubted would contain hints as to when the U.S. central bank will announce plans to scale back stimulus programs.
Last week, Fed Vice Chairwoman Yellen suggested the economy still needs the U.S. central bank's ultra-loose monetary policies to ensure recovery, and on Monday, the Fed's Bank of New York chief William C. Dudley said he was hopeful that recovery will gain steam soon but made no indication over a need to consider scaling back bond purchases.
Investors also bet that the minutes of the Fed’s October meeting due for release on Wednesday will paint a similar picture for the need to hold off on scaling back stimulus tools for now.
Meanwhile across the Atlantic, European Central Bank board member Joerg Asmussen warned that monetary authorities must be “very careful” when considering the use of negative interest rates to steer the economy away from low inflation rates, which supported the single currency.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was at 80.59, down 0.15%
On Wednesday, the U.S. is to release data on retail sales, consumer inflation, existing home sales and business inventories.
USD/JPY traded at 100.03, down 0.11%, in a range of 99.94 - 100.23 in the wake of Bernanke's comments that included saying Janet Yellen can be expected to do all she can to ensure a "more robust recovery" if confirmed as the next Federal Reserve chief.
Bernanke, in remarks in the U.S. late Tuesday, said the Federal Open Market Committee is in agreement that USD85 billion a month in bond purchases has aided recovery and that even when tapering begins interest rates will likely remain near zero "well after" the FOMC's 6.5% unemployment threshold is crossed.
"The target for the federal funds rate is likely to remain near zero for a considerable time after the asset purchases end, perhaps well after the unemployment threshold is crossed and at least until the preponderance of the data supports the beginning of the removal of policy accommodation," he said, adding that economic data will be key for tapering purchases.
"If these views are supported by incoming information, the FOMC will likely begin to moderate the pace of purchases," he said.
AUD/USD traded at 0.9421, down 0.14%, after Reserve Bank of Australia Assistant Governor Guy Debelle said the central bank would prefer a lower exchange rate and one major way that would happen is a change in the direction of U.S. monetary policy. Separately, a revamped Westpac-Melbourne Institute leading index moved forward to October that showed a lift in expectations for non-mining segments of the economy.
Overnight, the dollar traded lower against most major currencies ahead of the release of the minutes from the Federal Reserve's October policy meeting, which investors doubted would contain hints as to when the U.S. central bank will announce plans to scale back stimulus programs.
Last week, Fed Vice Chairwoman Yellen suggested the economy still needs the U.S. central bank's ultra-loose monetary policies to ensure recovery, and on Monday, the Fed's Bank of New York chief William C. Dudley said he was hopeful that recovery will gain steam soon but made no indication over a need to consider scaling back bond purchases.
Investors also bet that the minutes of the Fed’s October meeting due for release on Wednesday will paint a similar picture for the need to hold off on scaling back stimulus tools for now.
Meanwhile across the Atlantic, European Central Bank board member Joerg Asmussen warned that monetary authorities must be “very careful” when considering the use of negative interest rates to steer the economy away from low inflation rates, which supported the single currency.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was at 80.59, down 0.15%
On Wednesday, the U.S. is to release data on retail sales, consumer inflation, existing home sales and business inventories.