Rising expectations that the Federal Reserve Bank is once again prepared to begin tapering its monthly bond purchases has helped to broadly support the greenback against its peers during Asian trading. Market players are waiting for the Fed to make an announcement next week to that effect thanks to a Wall Street Journal report which indicated that the Fed is poised to bring asset purchases down to $65 billion a month, which is generally in line with analysts’ expectations. An increase in risk appetite which was supported by an equities rally also helped to give the U.S. Dollar a boost.
As reported at 11:34 a.m. (JST), the USD/JPY pair was trading at 104.65 Yen, an increase of 0.5% and nearing a key resistance level at 104.92 Yen. The Yen remains under pressure from expectations that the Bank of Japan will continue its current ultra loose policy which has caused the Yen to broadly nosedive; later this week the BOJ meets to announce this month’s monetary policy decision which many believe will be the maintenance of the status quo and a 2% inflation goal, despite the possibility of a slowing recovery. The EUR/USD pair traded at $1.3552, holding just above yesterday’s 2-month trough of $1.3508.
New Zealand Inflation Unexpectedly Rises
In New Zealand, unexpectedly higher inflation data raised expectations that the Reserve Bank of New Zealand might now consider raising interest rates; analysts had predicted a 0.1% decline for the 4th quarter of 2012 but the actual data showed a 0.1% rise instead. The NZD/USD pair rallied to $0.8324, a strong recovery from yesterday’s $0.8212, a 1-week low.