In spite of excessive volatility following comments from one of the U.S. Federal Reserve governors who hinted at an end to the Fed’s easing measures later this year, the U.S. Dollar was able to recover and move higher versus the common currency Euro and Japanese Yen once again. San Francisco Fed head John Williams said yesterday that the Fed might be ending its asset purchases program by the end of the year and will likely throttle back QE by this summer. He did concede, however, that there would need to be further gains made to meet the Fed’s “substantial improvement test” which would pave the way for monetary tightening. Indeed, recent data, including excessively benign consumer inflation, suggested that the U.S. economic recovery still has a way to go and many analysts don’t expect to see any pull back on stimulus given the figures.
As reported at 10:41 a.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.2876, a loss of 0.1% yet above the 6-week trough touched on Wednesday following news of a contraction in Eurozone growth rates. The USD/JPY edged about 0.1% higher to trade at 102.31 Yen, moving away from Wednesday’s peak of 102.76 Yen.