The U.S. Dollar stayed close to a 5-year peak against its Japanese counterpart as investors turn their focus on soon to be released economic data which either will or won’t support the Fed’s decision to reduce its bond purchasing program over the course of this year. Though Japanese markets are closed for a holiday until next Monday, in light Asian trade the USD/JPY pair remained range bound within tight trading bands. By the close of 2013, the greenback surged more than 21% against the Japanese Yen, an annual gain not seen in nearly 34 years and the divergence of the two central banks is likely to be the reason behind analysts’ predictions of further gains for the greenback in 2014 with the Fed tightening and the BOJ continuing to ease.
As reported at 12:08 p.m. (JST) in Tokyo, the USD/JPY pair traded at 105.24 Yen, holding close to Monday’s peak set at 105.41 Yen. The EUR/USD pair edged 0.1% higher to trade at $1.3767, slipping from last Friday’s 2-year peak at $1.3894; the Euro received a boost from repatriated funds as Eurozone banks look to beef up their respective capital base ahead of an ECB asset quality review. GBP/USD was up 0.1% to $1.6582, very close to the session high of $1.6592; the Pound Sterling is getting a boost from speculation that the BoE might be on the verge of hiking interest rates.
Investors Look to U.S. Data
Ahead today, markets will focus on new weekly claims for unemployment benefits in the U.S., a number closely watched by the Federal Reserve to help gauge whether or not the labor portion of their monetary policy is working. Also scheduled for release later today is the ISM’s reading on the nation’s factory activity.