USD/JPY Back to 101.50 on U.S. Easing-Cut and China Growth Concerns

The yen climbed against all of its major peers as Asian stocks dropped amid concerns that a reduction in monetary stimulus will weigh on the U.S. recovery as China’s economy slows.

The Dollar Index earlier touched an almost three-year high and Treasury yields rose after Federal Reserve Chairman Ben S. Bernanke said yesterday the central bank may taper monthly bond purchases if it’s confident of sustained gains in the economy. Australia’s dollar slid to an 11-month low after a private report showed China’s manufacturing is contracting for the first time in seven months.

“Stock prices are supported by monetary easing, so tapering would drive down equities,” said Minori Uchida, the Tokyo head of global market research at the Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s biggest financial group by market value. Signs of a slowdown in China “tend to turn markets to a risk-off mode and spur yen-buying in the short term.”


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