The U.S. Dollar was boosted up to a 2-month high versus the Japanese Yen as market players begin to reassess the Federal Reserve’s likely position regarding QE tapering given last week’s unexpectedly strong outcome of U.S. labor data. Many believe that the Fed is likely to initiate a curtailment of the current $85 billion monthly asset purchases beginning perhaps as soon as next month, or at the very least providing the markets with some clearer indication of exactly when they will begin scaling back the easing scheme. One analyst in Washington, D.C. believes that the evidence now supports the case for a December pull back.
As reported at 11:27 a.m. (JST) in Tokyo, the USD/JPY pair was trading 0.5% higher to 99.65 Yen, the highest level in nearly two months, though resistance is seen at the psychologically important level of 100.00 Yen followed by the recent 2-month high of 100.62 Yen. The EUR/USD edged higher by 0.2% to trade at $1.3424 and is remaining above the recently struck 2-month trough of $1.3295 which followed the unexpected rate cut by the ECB.
U.K. Inflation Report Eyed
The GBP/USD edged to a 2-month low of $1.5852 following the release of inflation data in the U.K. which showed inflation falling at an unexpected pace in October. Markets will await the Bank of England’s release of its inflation outlook later today and the Pound could get some respite; analysts believe that the BoE report might also discuss its response to the unemployment rate, with hopes that an interest rate hike could be in the making.