Incoming Fed chair Janet Yellen seems to have struck the right balance – the US dollar did not sell-off on her comments while US equities rallied to record levels. Whilst acknowledging the economy is significantly stronger and continues to improve, she said the US economic recovery is still fragile and as a result, prematurely pulling aid could derail the recovery. This was not really fresh news and traders didn’t add to US dollar shorts.
Yen weakness persists in Asia
The US dollar index just held onto the 81 level, with yen selling being the most notable move for the USD. USD/JPY pushed through ¥100 and has continued its run in Asia with a high of ¥100.26. A slower reading for Japan’s Q3 GDP saw talk of further stimulus from the BoJ ramp up along with comments by Finance minister Aso who said FX intervention is a policy option.
There is nothing on the economic calendar for Japan today but the price action in the pair is definitely interesting. There could be some resistance coming up in the ¥100.60 region which is the September high. Out of the US later today we have the Empire State manufacturing index, import prices and industrial production to look out for.