The dollar sauntered on to record its largest weekly drop against the yen since April as traders lowered speculation that the central bank will increase interest rates and before Federal Reserve Chair Janet Yellen appears before lawmakers next week.
The U.S. currency was slightly steady at 101.27 yen as of 6:55 a.m. in London, after posting a decline of 0.8 percent since Monday, the steepest drop since the week through April 11. The greenback was trading at $1.3599 per euro up from $1.3609 on Thursday. The yen rose 0.1 percent to trade at 137.72 per euro after earlier appreciating to 137.50 on Thursday, the highest level since February 6.
Analysts found nothing conclusive on interest rate increases from the minutes of Fed’s meeting in June, while minimal volatility spurred demand for assets with higher yields.
“The Fed is on the cautionary side despite data improving,” Roy Teo, a Singapore-based currency strategist at ABN Amro Bank NV told Bloomberg. “With the current environment, where volatility remains low, the trend of carry trades remains in vogue and therefore you can see, to a certain extent, the dollar is underperforming.”
The minutes of a June 17-18 meeting of the Federal Open Market Committee provided no signals on when the interest rates may be increased, with policymakers saying that will depend on “economic outlook”.
The yen traded near the highest level in five months against the euro after a banking company in Portugal defaulted on debt repayments, fuelling demand for safe havens. The Japanese currency rose 0.6 percent over the past week and continued rising today despite assurances from the Bank of Portugal that Banco Espirito Santo SA, which defaulted on its short-term loan repayments, is protected. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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