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Dollar Rising Against Japanese Yen On Resolution Optimism


The dollar is gaining ground against the Japanese Yen on Thursday, but is slightly weaker against its major European competitors. With the partial shutdown of the U.S. government reaching day 10, lawmakers appear to be getting closer to a resolution.

President Barack Obama will meet with the House Republican Leadership at the White House this afternoon. They are expected to discuss a possible short-term deal to fund the government and raise the debt ceiling.

Ahead of the meeting with House Republicans, President Obama will meet with Senate Democrats, while Treasury Secretary Jack Lew testified on Capitol Hill this morning in an effort to convince lawmakers of the perils of default.

President Barack Obama announced the nomination of Dr. Janet Yellen as the next Chair of the Federal Reserve on Wednesday. Noting that Yellen would be the first woman Chair of the Fed, Obama expressed confidence that she would do an excellent job and urged the Senate to confirm her nomination without delay.

Concerns about a government shutdown kept the Federal Reserve from scaling back its monetary stimulus last month, according to the minutes of the Fed's September 16-17 meeting.

Wall Street expected the Fed to taper its $85 billion per month bond-buying plan, but in a "close call" most policy makers chose to leave the program in place.

Still, the minutes show most Fed members anticipate the economy will be strong enough to begin winding down QE3 this year and ending it completely by the middle of 2014.

While the data was once again impacted by technical issues, the Labor Department released a report on Thursday showing that first-time claims for U.S. unemployment benefits rose by much more than expected in the week ended October 5th.

The report said initial jobless claims jumped to 374,000, an increase of 66,000 from the previous week's unrevised figure of 308,000. Economists had been expecting jobless claims to edge up to 310,000.

The dollar extended its gains against the Japanese Yen to a third consecutive session on Thursday and reached Y98.219, its highest level since September 30th.

Core machine orders in Japan were up a seasonally adjusted 5.4 percent in August compared to the previous month, the Cabinet Office said on Thursday, coming in at 819.3 billion yen. That headline figure beat forecasts for an increase of 2.5 percent following the flat reading in July.

Japan's consumer confidence improved significantly in September, and to a larger extent than expected by economists, data from a survey showed Thursday. The seasonally adjusted consumer confidence index, excluding one-person households, advanced to 45.4 in September from 43 in August, figures released by the Cabinet Office revealed. Economists expected the index to rise to 43.5. In July, the score was 43.6.

The greenback rose to an early high of $1.3486 against the Euro on Thursday, but has since dropped to around $1.3540.

Eurozone house prices increased in the second quarter, recovering from a sharp fall recorded three months ago, data from European statistical agency Eurostat revealed Thursday. House prices euro area rose 0.3 percent quarter-on-quarter in the second quarter following a 1.4 percent decline in the first quarter.

Turnover in the German manufacturing sector increased in August, after falling in the previous months, data released by the Federal Statistical Office showed Thursday. Manufacturing turnover increased a seasonally and working-day adjusted 2.3 percent month-on-month in August, reversing the declines of 0.7 percent and 0.4 percent seen in July and June.

French industrial production increased for the first time in four months in August, data from statistical office Insee showed Thursday. Output increased 0.2 percent month-on-month in August following a 0.6 percent decline in July. Economists had forecast a 0.6 percent increase.

The Bank of England kept its key interest rates and quantitative easing unchanged as it was felt currently, there is little need for additional stimulus to support the economy.

The nine-member monetary policy committee headed by Mark Carney concluded the two-day rate setting meeting by holding the key rate at a record low 0.50 percent and the size of monetary stimulus at GBP 375 billion.

The central bank introduced forward guidance in August, linking the interest rate outlook to unemployment for the first time in its history. Accordingly, the rate is set to remain on hold at 0.50 percent until 2016.

The buck reached an early high of $1.5913 against the pound sterling Thursday, but has since pulled back to around $1.5965.

by RTTNews Staff Writer

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