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US Dollar Seesaws Amid Flurry of Official Commentary
THE TAKEAWAY: The US Dollar saw seesaw volatility earlier in the week as central bankers and policy makers released statements and outlooks, but started to trend lower as the Yen strengthened.
Created Using Marketscope 2.0 (Hourly Chart)
The US Dollar rallied early in the trading week as Bank of Japan Governor candidate Harahiko Kuroda said that “some additional measures” could be justified this year, hinting at an expansion of stimulus in the months ahead and sending the Yen sharply lower against the buck. The move appeared to spill over into broad Dollar strength as the newswires buzzed with bets on continued BOJ activism.
A G7 meeting on Tuesday marked a sharp decline in greenback as Japan’s Finance Minister Taro Aso attempted to publically spin the statement following the sit-down as suggesting that Japan’s monetary policy was aimed at deflation rather than a currency level, thereby turning a blind eye to the so-called “currency wars”. The rhetoric would have been supportive if not for a swift counter-strike by a G7 official who quickly took to the wires to say that the group’s intent was misinterpreted, reiterating concern about excessive Yen moves.
The US Dollar Index rose again as the British Pound and Euro fell on the back of the Bank of England Inflation Report, where policymakers said UK growth was likely to remain weak and identified Eurozone threats as ongoing. As the week came to a close, the safe haven currency started to trend downward anew however as the Yen strengthened following the Bank of Japan rate decision. Maasaki Shirakawa and company did not announce new stimulus measures and released a statement cautiously hinting at a forthcoming recovery.
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