The Senate Banking Committee sent Ms. Yellen’s nomination to the full Senate on Thursday morning by a vote of 14-8 helping to support the US dollar. Ms. Yellen eased through hearings supporting Mr. Bernanke’s plans but adding growth to her story line. The US dollar is trading at 81.08 on Friday morning. US Philly fed manufacturing index moved down to 6.5 vs 19.8 prev lowest in 8 months.
BOJ’s Kuroda gave hints over fresh round of monetary stimulus if steps taken to finish deflation are hampered by tax rise next April. The yen has been dancing in counter-step for months, with every rally in the share index a signal for speculators to dump the yen. A lower currency then promises to boost Japanese exports and earnings, further supporting shares. So the U.S. dollar spiking above 101.20 yen for the first time since July was a clear green light to buy shares. The euro also climbed as far as 136.54 yen, highs not seen since October 2009. The euro moved higher after ECB chief trashed the negative rate rumor.
The U.S. dollar fared less well against the euro, which bounced after European Central Bank President Mario Draghi shot down a report that the central bank was actively considering cutting a key interest rate below zero. That lifted the common currency up to $1.3465, from a one-week low of $1.3399. A couple of ECB members are talking later on Friday, along with two more officials from the Fed.
Currencies leveraged to commodities and global growth took a hit with the Canadian, New Zealand and Australian dollar all falling sharply. The Australian dollar took a further slug from Reserve Bank of Australia (RBA) Governor Glenn Stevens who said he was open to the idea of intervention to push the currency lower. While he added that the risks of action were still too great, the comment served as an excuse for speculators to breach options at $0.9250 and trigger a run to $0.9231. The kiwi dollar extended its declined after Reserve Bank of Australia governor Glenn Stevens said he was “open-minded” on intervening in currency markets if the conditions were right to try and take the steam out of a persistently strong Aussie dollar. The NZD dropped to 81.83.
The surprise market player this week has been the pound which climbed close to 1.62 and is holding at 1.6191 on Friday morning. Driving the British pound higher in the first half of November has been the continual flow of UK economic data releases. But it was the latest edition of the Bank of England’s Inflation Report that really got the GBP bulls on the run higher. However, now that we enter the second half of November we find the data and event risks drying up, and with them the possibility for fresh GBP impetus. As such, a host of currency market commentators have been suggesting the pound sterling is likely to remain bound by recent ranges in coming sessions. The Bank of England minutes showed policymakers felt there were no major inflation risks and there would be no rush to raise interest rates.