USD/JPY Back to 99 After Stocks Drop

The yen remained higher following a gain yesterday when a global decline in stocks boosted demand for safer assets ahead of testimony by Federal Reserve Chairman Ben S. Bernanke this week.

Demand for the dollar was supported before U.S. data that may show housing starts increased for a second month, adding to the case for the Federal Open Market Committee to slow monetary stimulus. The pound was near a four-month low against the euro before the Bank of England releases minutes of its July 3-4 policy meeting amid speculation Governor Mark Carney will tie BOE guidance on interest rates to economic developments.

“Market views on Chairman Bernanke are divided, but I think he will use the opportunity to restate the possibility of a quantitative-easing reduction in line with the hawkish stance at the FOMC,” said Junichi Ishikawa, an analyst at IG Markets Securities Ltd. in Tokyo. “It’s possible the yen will be bid on risk aversion should stocks retreat due to concern about tapering — at least in the short term.”


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