The yen continued maintain its title as a safe haven currency since the start of the New Year on Wednesday, even as the dollar recovered slightly from its seven-week low against the yen as investors eagerly await Federal Reserve Chair Janet Yellen’s monetary policy announcements later today. The pair was trading at 113.05 yen to the dollar, a 0.4 percent gain for the session. On Tuesday San Francisco Federal Reserve Bank President John Williams said that there seems to be a “good case” for three rate hikes in 2017, even in the absence of a fiscal stimulus policy. In addition to Yellen’s statement on Wednesday, the U.S. consumer price index report is due, which is expected to keep traders on their toes.
The dollar index traded at 100.44 .DXY on Wednesday, down nearly 3.5 percent since 15-year highs hit only two weeks ago.
The British pound saw its biggest rise in nearly twenty years on Tuesday after British Prime Minister Theresa May spoke about her Brexit plans. In her speech, May promised to hold a parliamentary vote to decide how Britain will eventually exit the European Union. She also noted that Britain will remove itself from the EU’s single market and will not seek to maintain any of its benefits. The pound briefly hit $1.2416 on Tuesday, a two-week high. Analysts question whether this gain resulted primarily from May’s statement or from the dollar’s recent struggles.
Asian Stocks Soar
Incoming President Donald Trump expressed concerns about the strong dollar, which sent Asian stocks broadly higher on Wednesday, with exporter shares leading the rise. Hong Kong stocks are hovering around a key resistance level of 23,000, a breach of which could extend the gains significantly. MSCI’s index of shares outside of Japan traded near three-month highs on Wednesday, rising 0.3 percent. Chinese shares remain troubled, however, following Trump’s statement that the weak yuan is hurting the American economy.
