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USD/JPY near 103 on Fed Bets

The dollar pared its biggest weekly drop versus the yen since October amid speculation the Federal Reserve will decide to reduce stimulus at a meeting next week even after data showed signs that economic growth is slowing.

The greenback rebounded from its steepest slide since August against the yen as a technical indicator signaled it might have fallen too far. Japan’s currency rose against most major peers yesterday after investors sought the safety of the nation’s assets amid a rout in emerging markets. A report yesterday showed the number of Americans continuing to receive jobless benefits unexpectedly rose, after data earlier this month showed the U.S. added fewer jobs than analysts forecast.

“There was some speculation in the market that because of the hiccup in the jobs numbers they may pull back, but I think the Fed’s going to continue with its very measured tapering,” said Todd Elmer, a currency strategist in Singapore at Citigroup Inc. “That should translate to dollar appreciation.”

Bloomberg [1]

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