Dollar, yen weaken after Yellen testimony

NEW YORK Fri Nov 15, 2013 4:36pm EST

1 of 4. Yuan and Yen banknotes are seen in this picture illustration taken in Tokyo May 29, 2012.

Credit: Reuters/Issei Kato

NEW YORK (Reuters) - The safe-haven dollar and yen fell on Friday after Federal Reserve Vice Chair Janet Yellen lifted investor appetite for riskier assets by defending the U.S. central bank's current stimulus measures.

Yellen, speaking at her confirmation hearing before the Senate Banking committee on Thursday to take over from Fed Chairman Ben Bernanke, said the Fed will keep its stimulus program intact until the U.S. economy shows more strength and stability.

Her comments have dented the low-yielding yen, pushing the dollar to a two-month high against the Japanese currency. The yen typically falls when investors are looking to take on risk.

The dollar, on the other hand, slid to a one-week low against the euro.

Data on Friday showed U.S. industrial production dipped unexpectedly in October as output at power plants and mines declined, but a third straight month of gains in manufacturing output suggested the economy remained on a moderate growth path.

"The moderate pace of growth in the U.S. economy no doubt exacerbated by the budget impasse and lack of progress in the job market may explain why the Fed will continue with the monthly purchases," said Sean Cotton, vice president and senior trader at Bank of the West in San Ramon, California.

"As a result, the dollar is extending its decline and expectation is for weakness until the Fed indicates otherwise. This may be the trend until March."

The dollar index fell 0.2 percent to 80.83 .DXY. On the week, the dollar index was down 0.6 percent, its weakest weekly performance since October 18.

The euro was up 0.3 percent at $1.3494, after touching $1.3505, its highest since November 7. It gained 0.8 percent against the dollar this week.

Despite Friday's gains, analysts said the euro's overall prospects looked less upbeat than the dollar's given the disparity between the U.S. and European economies. Weak euro zone GDP numbers on Thursday have kept alive the possibility of more central bank action to stimulate growth.

"We feel confident that the dollar will be trading higher than where it is now against the euro and yen in three months time and maybe even sooner if data is good," said Kathy Lien, managing director at BK Asset Management in New York.

"U.S. rates are headed higher and as long as this prospect does not change, we can expect another 2 to 3 percent rally in the dollar."

The yen fell broadly, with sterling hitting a four-year high against the Japanese currency. The pound was last at 161.52 yen, up 0.6 percent.

The dollar rose 0.2 percent to 100.24 yen, having touched a high of 100.43 yen earlier in the global trading day and giving it the potential to target the September 11 high of 100.60 yen.

The euro was also higher against the yen, hitting a two-week high of 135.27 yen, up 0.5 percent.

For the week, the dollar gained 1.1 percent against the yen, its third straight weekly advance.

"The dollar/yen exchange rate broke a series of lower highs dating back to its multi-year peak, and indeed the surge offers evidence that it may yet continue higher," said David Rodriguez, quantitative strategist at DailyFX in New York.

Options markets showed some investors betting on dollar strength against the yen in the weeks to come.

The Australian and New Zealand dollars, meanwhile, which offer higher yields than many other currencies and often gain when investors' risk appetite increases, both rose. The Australian dollar traded up 0.5 percent at US$0.9368 while the New Zealand dollar rose 0.7 percent to US$0.8330.

(Additional reporting by Nick Olivari; Editing by Dan Grebler)

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Comments (6)
coolsun wrote:
We think natural gas will gain strength monday next week and breakout to higher trading range based on west coast snow and cold front. Snow is expecting in california and a cold canadian front is coming from the west and will reach down to the pacific wednesday next week bringing snow and rain and colder temperatures to the west coast. We expect natural gas prices to reach lows over the weekend and then breakout monday and into friday of next week. We can expect natural gas to reach upward of 3.80 by the close next friday. Heavy withdrawals of storage are expected into december as the forecast remains lower temperatures across the lower 48. Despite NOAA weather models that are tainted with geopolitics. We believe that noaa judgement is impaired due to the politics of global warming.

Nov 15, 2013 11:07am EST  --  Report as abuse
coolsun wrote:
We think that natural gas is a safe haven in these changing times and will trump supply and demand as the political climate changes. We think natural gas will gain strength monday next week and breakout to higher trading range based on west coast snow and cold front. Snow is expecting in california and a cold canadian front is coming from the west and will reach down to the pacific wednesday next week bringing snow and rain and colder temperatures to the west coast. We expect natural gas prices to reach lows over the weekend and then breakout monday and into friday of next week. We can expect natural gas to reach upward of 3.80 by the close next friday. Heavy withdrawals of storage are expected into december as the forecast remains lower temperatures across the lower 48. Despite NOAA weather models that are tainted with geopolitics. We believe that noaa judgement is impaired due to the politics of global warming.

Nov 15, 2013 11:08am EST  --  Report as abuse
smarch wrote:
I think Yellen might be a robot.

Nov 15, 2013 11:21am EST  --  Report as abuse
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