Yen Firms Against Rivals on Concerns

The Japanese Yen held on to earlier gains made against both the U.S. Dollar and the common currency Euro as market players focus on the likely outcome of an Italian sovereign bond sale which should help to pinpoint the Euro’s direction. In Italy, the weekend’s election resulted in a political stalemate with no clear and decisive political party taking the reins to lead the country; as a result, analysts foresee a “challenging environment” for new issuances of sovereign debt, specifically 5-year and 10-year Treasury notes.

Investors will also be taking into consideration comments recently made by Federal Reserve chief Ben Bernanke which impacted the greenback. In testimony given to the U.S. Congress, Bernanke reaffirmed the Fed’s commitment to monthly bond purchases in order to stimulate the lackluster economy. Bernanke’s comments alleviated some investors’ fears that the Fed might take a more hawkish position and begin to curtail its bond purchase plan.

As reported at 1:18 p.m. (JST) in Tokyo, the USD/JPY pair was trading at 91.90 Yen, a loss of 0.1% but above Monday’s 1-month trough of 90.85 Yen. The EUR/JPY pair was also about 0.1% lower at 120.05 Yen, but managed to hold above the 1-month low struck this past Monday.