Market players are once again revisiting the likelihood that the U.S. Federal Reserve will maintain the status quo as regards QE tapering. Yesterday, the recently appointed and likely incoming chairperson Janet Yellen hinted that the Fed might maintain its ultra loose policy, which caused 10-year U.S. Treasury yields to drop to 2.688% and the U.S. Dollar to come under additional pressure. According to Yellen, the high U.S. unemployment rate was a worrying factor for the FOMC as is the still struggling economy and the American labor market which she said didn’t meet their potential.
As reported at 11:37 a.m. (JST) in Tokyo, the U.S. Dollar Index slipped to a weekly trough of 80.740 .DXY, before recovering slightly to 80.804 .DXY. The EUR/USD edged higher to $1.3500, recovering from yesterday’s trough of $1.3390. The USD/JPY slipped from Tuesday’s 2-month high of 99.80 Japanese Yen and was recently trading at 99.20 Yen.
Yellen’s Confirmation Expected
Janet Yellen will be appearing before the U.S. Senate’s Banking Committee to address questions regarding her nomination as the Federal Reserve Chairman. She is well known for her dovish leanings, and her comments threw cold water on some investors’ expectations that the Fed might consider reining in its $85 billion in monthly bond purchases given the improvement in the private sector employment rolls. Many believe that her nomination is not likely to be challenged.