The Japanese Yen edged lower and then firmed during the Asian trading session, following a broad rise triggered by a Wall Street slump on growing expectations that the U.S. central bank might begin scaling back quantitative easing measures even as soon as this year. Many analysts believe that the recent news that the U.S. Congress reached a deal that could avert another political showdown early next year paved the way for the Federal Reserve’s withdrawal of stimulus.
As reported at 11:14 a.m. (JST) in Tokyo, the USD/JPY pair traded at 102.46 Yen, edging from Tuesday’s 7-month peak of 103.40 Yen, while the EUR/JPY pair hit 141.20 Yen, moving farther from Tuesday’s 5-year high o 142.19 Yen. Risk aversion resulted in a sell off of commodity-linked currencies like the Aussie Dollar which had slipped to $0.9034 against the greenback, a loss of more than 1% for the AUD/USD pair.
RBA Doves to Set Tone?
In Australia, upbeat jobs data released a few hours ago gave the AUD/USD pair a short lived boost to $0.9073 but it quickly lost its momentum and was more recently trading even lower at $0.9026. Though the numbers met expectations, analysts believe it is a clear indication of weakness in the Australian labor market which could result in the Reserve Bank of Australia taking on a more dovish stance.