Forexpros – The U.S. dollar rose to a one-week high against the yen on Thursday, amid growing hopes for further easing measures by the Federal Reserve and as uncertainty over the outcome of a Spanish government debt auction later in the day supported safe haven demand.
USD/JPY hit 79.48 during early European trade, the pair’s highest since May 30; the pair subsequently consolidated at 79.28, adding 0.14%.
The pair was likely to find support at 78.86, the low of May 30 and resistance at 79.70, the high of May 28.
Investors were eyeing a Congressional testimony by Federal Chairman Ben Bernanke about the state of the U.S. economy, with hopes fresh stimulus measures will be announced.
On Wednesday, Fed Vice-Chairman Janet Yellen laid out the case for more easing to bolster a fragile economy as financial turmoil mounts in the euro zone. Yellen’s comments were echoed by Atlanta Fed President Dennis Lockhart, saying his level of concern has risen since the U.S. central bank’s April meeting.
Meanwhile, markets were also awaiting the outcome of a highly-anticipated Spanish 10 year bond auction later in the day, after Treasury Minister Cristobal Montoro said that financial markets were effectively closed to Spain because of the current high level of the country’s borrowing costs.
Sentiment remained vulnerable after the European Central Bank extended its policy of unlimited three-month loans for banks until mid-January 2013 at Wednesday’s policy meeting, but didn’t announce any new three-year lending operations, disappointing hopes that the bank would implement fresh easing measures to help stabilize markets.
Elsewhere, the yen was higher against the euro with EUR/JPY shedding 0.11%, to hit 99.51.
Later in the day, the U.S. was to release government data on initial unemployment claims, while Fed Chairman Ben Bernanke was to appear before the Joint Economic Committee, in Washington.
Forexpros
