9 Oct 2013
USD/JPY gets some respite on Yellen nomination distractions
FXstreet.com (London) - The prospect of President Obama’s nomination of Janet Yellen as the successor to Ben Bernanke has given some relief to debt ceiling fear-induced moves. Yen fell across the board on the news that Obama would be picking the ultra-dovish Yellen for the top Fed job.
Her nomination makes any aggressive tapering of the Fed’s monthly asset purchases unlikely, helping to support market liquidity.
Obama is expected to announce his nomination of Janet Yellen at the White House at 3pm EDT (7pm GMT). Yellen’s confirmation comes a month after previous favourite Larry Summers withdrew himself from the race in face of strong opposition from Democrats.
USD/JPY has been the most correlated pair to debt ceiling sentiment, with haven flows into yen the closer Congress gets towards it 17 October hard ceiling, after which it will be unable to meet its debt obligations.
The pair has gained 0.45 percent, to JPY97.3250 after being driven down to jpy96.58 on Monday.
Despite the relief rally, positive sentiment may be fleeting. Yellen’s nomination has been a done deal ever since Larry Summers’ resignation from the race in September. Once the nomination is done and dusted, attention will return to the US debt ceiling deadlock, with just 8 days to avoid a historic US default. Should congress continue its deadlock into the weekend, expect to see Yen continue its strength against the dollar.
Her nomination makes any aggressive tapering of the Fed’s monthly asset purchases unlikely, helping to support market liquidity.
Obama is expected to announce his nomination of Janet Yellen at the White House at 3pm EDT (7pm GMT). Yellen’s confirmation comes a month after previous favourite Larry Summers withdrew himself from the race in face of strong opposition from Democrats.
USD/JPY has been the most correlated pair to debt ceiling sentiment, with haven flows into yen the closer Congress gets towards it 17 October hard ceiling, after which it will be unable to meet its debt obligations.
The pair has gained 0.45 percent, to JPY97.3250 after being driven down to jpy96.58 on Monday.
Despite the relief rally, positive sentiment may be fleeting. Yellen’s nomination has been a done deal ever since Larry Summers’ resignation from the race in September. Once the nomination is done and dusted, attention will return to the US debt ceiling deadlock, with just 8 days to avoid a historic US default. Should congress continue its deadlock into the weekend, expect to see Yen continue its strength against the dollar.