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Yesterday the yen rose for a fifth day versus the dollar and the euro after Federal Reserve Chairman Ben S. Bernanke said the U.S. recovery is far from complete, spurring demand for haven amid bets the central bank will add stimulus. The Japanese currency advanced against all of its 16 most- traded peers after the Bank of Japan refrained from easing monetary policy. The Bank of Japan kept its key rate between zero and 0.1 percent and left unchanged its 30 trillion-yen ($370 billion) asset-purchase fund. No board member proposed additional easing at the two-day meeting concluded, the central bank said. The yen has weakened 4.2 percent against the dollar since the Bank of Japan set a 1 percent inflation goal on Feb. 14 and increased its planned purchases of government bonds.
The euro fell to the lowest level in a month against the yen before Italy auctions bonds this week amid concern the region’s debt crisis is spreading. Italy will sell 11 billion euros ($14.4 billion) of bills, followed by an offering of debt due from 2015 to 2023. Spain’s 10-year yields jumped more than 40 basis points last week, the biggest surge since the five days ended Jan. 6, as Prime Minister Mariano Rajoy said the nation is in “extreme difficulty.” Spanish banks may need additional capital if the economy weakens more than expected, Bank of Spain Governor Miguel Angel Fernandez Ordonez said at a conference in Madrid as he warned the recovery will be slow. Spanish lenders have made provisions of 112 billion euros in the four years through 2011, and that figure will rise to 147 billion euros once tighter rules approved in February have been implemented, Ordonez said. If the economy recovers, that will be “more than enough,” he said.
EUR/USD: yesterday the pair decreased, traded below $1.3100.
GBP/USD: yesterday the pair fell to a low of the last week, however was restored later.
USD/JPY: yesterday the pair fell to a figure, below Y81.00.
US data starts at 1230GMT, the US Import Price Index data is due. Both the weekly EIA crude oil and gas stocks data are due at 1430GMT. Also at 1430GMT, Boston Fed President Eric Rosengren will speak at the Atlanta Fed's Financial Markets Conference, chairing a discussion of Money Market Mutual Funds, in Stone Mountain. The US 10-year auction is due at 1700GMT, while at 1800GMT both the latest FOMC Beige Book survey and also the Treasury Dept Monthly Budget Statement are due. Later on, at 2330GMT, Federal Reserve Vice Chair Janet Yellen speaks to the New York University Money Marketeers on "The Economic Outlook and Monetary Policy".
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