The yen gained Thursday amid a sharp sell-off of Japanese stocks while the US dollar fell against the euro after Federal Reserve chief Ben Bernanke cautioned not to expect policy tightening at least for a few months.
(AFP/Kazuhiro Nogi) NEW YORK: The yen gained Thursday amid a sharp sell-off of Japanese stocks while the US dollar fell against the euro after Federal Reserve chief Ben Bernanke cautioned not to expect policy tightening at least for a few months.
The US dollar fell to 101.82 yen at 2100 GMT, down from 103.10 yen a day earlier, while the euro slid to 131.72 yen from 132.58.
The Japanese currency’s gain came after a 7.3 per cent plunge in Tokyo stocks, a correction that came after a sharp run-up and was sparked by an indicator showing a surprise contraction in Chinese manufacturing output in May.
Analysts at FX360 suggested that after having shorted the Japanese currency for weeks, traders were now taking profits on those trades, halting its steady fall downward.
The greenback also reversed its steady climb on the euro, the euro pushing to US$1.2935 from US$1.2855, a day after the two whipsawed on confused interpretations of Bernanke’s testimony to Congress on the direction of the Fed’s quantitative easing program.
Distilled down, though, Bernanke seemed to make clear that the Fed needed to see a few months’ more of data before it would weigh reining in its QE bond-purchase program — which stirred dollar bulls who thought such a move could come much sooner.
That helped stir a correction in the US dollar, said David Song of DailyFX.
“Although we’re looking for a short-term correction in the US dollar, the bullish sentiment surrounding the reserve currency should gather pace in the second half of the year amid the shift in the policy outlook,” he said.
The British pound also gained on the US dollar, rising to US$1.5107 from US$1.5047, and the US dollar fell to 0.9680 Swiss franc from 0.9781 franc.
Source AFP
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