Investing.com - The dollar rose against the yen on Wednesday
after the Federal Reserve suggested in the minutes of its January
policy meeting that it will continue dismantling stimulus programs
that soften the greenback to kick-start recovery.
Asset purchases aim to bolster the economy by suppressing
long-term interest rates, a strategy that sends investors to stocks
to spur investing and hiring, thus weakening the dollar as a side
The Fed added it may no longer consider a 6.5% unemployment rate
as a threshold for rate hikes, which offset the greenback's
In U.S. trading, USD/JPY was down 0.03% and trading at 102.33,
up from a session low of 101.85 and off a high of 102.47.
The pair was expected to test support at 101.39, Monday's low,
and resistance at 102.75, Tuesday's high.
At its Jan. 28-29 policy meeting, the Fed voted to trim its
monthly asset purchasing program to $65 billion from $75 billion
and stressed benchmark interest rates will stay at 0.00-0.25% until
the unemployment rates approaches 6.5% or even dips below that
mark, depending on the health of the economy in the context of
The minutes released on Wednesday, however, revealed that
monetary authorities debated ditching language suggesting rates may
rise if the unemployment rate falls past 6.5%, a policy tool known
as forward guidance.
"Participants agreed that, with the unemployment rate
approaching 6-1/2 percent, it would soon be appropriate for the
Committee to change its forward guidance in order to provide
information about its decisions regarding the federal funds rate
after that threshold was crossed," the minutes reported.
The unemployment rate currently stands at 6.6% though many still
remain out of the labor force due to fruitless job searches, which
artificially lowers the percentage headline unemployment rate.
Those out of work but not actively seek jobs are not counted as
part of the labor force.
Elsewhere, Fed officials were willing to overlook January's soft
jobs report and other economic indicators taking into account a
string of powerful winter storms may have disrupted commerce.
While some hawkish member felt the time to hike interest rates
will come soon, consensus pointed to keeping rates on hold while
dismantling monthly bond purchases, which gave the greenback some
"All members agreed that the cumulative improvement in labor
market conditions and the likelihood of continuing improvement
indicated that it would be appropriate to make a further measured
reduction in the pace of its asset purchases at this meeting," the
"Members again judged that, if the economy continued to develop
as anticipated, further reductions would be undertaken in measured
Elsewhere on Wednesday, the Commerce Department reported that
U.S. housing starts fell 16% in January to 880,000 units, outpacing
expectations for a 5.7% drop, though a series of winter storms may
have weakened the indicator and not a downtick in demand.
The number of building permits issued last month declined by
5.4% to a seasonally adjusted 937,000 units, outpacing expectations
for a 1.8% decline.
A separate report revealed that the U.S. producer price index
rose 0.2% last month, beating forecasts for a 0.1% gain, while core
producer prices were also up 0.2%.
The yen, meanwhile, was up against the euro and down against the
pound, with EUR/JPY down 0.15% at 140.63, and GBP/JPY trading up
0.07% at 170.89.
On Thursday, the U.S. is to release the weekly report on initial
jobless claims and data on consumer price inflation.
The U.S. is also to release data on manufacturing activity in
the Philadelphia region.
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