Investing.com - The yen and the Aussie ticked lower on Tuesday in Asia with comments in a letter released by the Federal Reserve chief in focus.
Federal Reserve Chair Janet Yellen said Monday she and her colleagues hope and expect the economy will continue to expand and if that is the case, it will be appropriate to raise interest rates.
"Most of us expect the pace of that normalization to be gradual," Yellen said in a letter to Ralph Nader released by the Federal Reserve.
Nader penned an open letter to Yellen Oct. 30, calling on the policymaking Federal Open Market Committee to raise the fed funds rate off the zero lower bound where it has been since December 2008.
USD/JPY changed hands at 122.93, up 0.06%, while AUD/USD traded at 0.7188, down 0.06%.
Ahead, Japan reports its PMI for November with a level of 52.1 seen, down from 52.4 in October.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell 0.06% to 99.77.
Overnight, the dollar remained higher against the other major currencies on Monday, despite the release of disappointing U.S. housing sector data, as expectations for a December rate hike by the Federal Reserve continued to support the greenback.
The U.S. National Association of Realtors said that existing home sales decreased by 3.4% to 5.36 million units last month from 5.55 million in September. Analysts had expected existing home sales to fall 2.3% to 5.40 million units in October.
But demand for the dollar continued to be underpinned by expectations that the Fed is on track to raise interest rates next month.
New York Fed President William Dudley said Friday that there is a "strong case" for hiking rates at the central bank’s next meeting in December as long as economic data continues to remain solid.
Also on Monday, the Federal Reserve Board of Governors scheduled a closed-door meeting, held under expedited procedures, to review the discount rates charged by its regional banks.
The discount rate is the interest rate charged to commercial banks on loans they receive from their regional Federal Reserve Bank lending facilities, also known as the discount window. When the Fed increases the discount rate, it makes the borrowing costs for banks more expensive, decreasing the money supply in the system.
The discount rate differs from the Federal Funds Rate, which is the rate banks lend to one another on overnight loans for funds maintained at the Federal Reserve. In February, 2010, the Fed increased the spread between the discount rate and the top of the target range of the Federal Funds Rate to 50 basis points. It came nearly two years after the Fed reduced the spread to 25 points in March, 2008, in an effort to bolster liquidity.
The Federal Funds Rate has remained at a level between zero and 0.25% for nearly seven years, since December, 2008. The announcement of the previously unscheduled meeting helps raise speculation that the U.S. central bank will lift the Fed Funds Rate when it meets next on Dec. 15-16. The Fed last held an unscheduled meeting in December, 2012. An initial rate hike is viewed as bearish for gold, which is not attached to dividends or interest rates and struggles to compete with high-yield bearing assets.