The yen weakened further during the Asian session and is on course to end the week with losses as demand for safe haven assets fell. Market sentiment is high and risk appetite has been propped up due to continued economic stimulus measures from major central banks, especially from the Federal Reserve in the US.
Janet Yellen, who is a nominee for the post of Fed Chief, said at her testimony in front of the US Senate Committee on Thursday that she supports the Fed’s current stimulus measures and believes the US economy still requires the Fed’s assistance, primarily due to the elevated level of unemployment.
The Fed’s accommodative policy and stimulus measures which include $85 billion a month in bond purchases, have a weakening effect on the dollar. The greenback weakened after Yellen’s comments, especially against the euro and sterling.
During the Asian session, EURUSD and GBPUSD mainly consolidated gains made in the prior US session. The euro ended the session with a slight gain of 0.03 percent to trade at $1.3462. Sterling held above the key $1.60 handle and hit a session high of $1.6084.
The yen underperformed due to comments from Japanese Finance Minister Taro Aso who said that currency market intervention was a policy tool that could be used to weaken the yen, as part of the government’s effort to fight deflation and stimulate the economy.
USDJPY broke above the key 100 yen level for the first time in two months yesterday, and hit as high as 100.30 yen in Asia today.Publication source