The yen traded in proximity to seven-week highs against the US dollar as Turkeys central bank steps to stop a sell-off in the nations currency failed to support other emerging markets currencies, making safe-haven currencies, such as the yen more appealing.
USD/JPY hit a session low at 102.02 at 14:08 GMT, after which consolidation followed at 102.07, losing 0.84% for the day. Support was likely to be received at January 23rd low, 102.00, also the pairs weakest since December 6th.
Yesterday, Turkish policy makers decided to double the main interest rate at a late-night emergency meeting in Ankara.
“There was a sense that Turkey, by hiking interest rates, had resolved the lira pressure and by extension would provide comfort to other emerging markets,” said Daragh Maher, a currency strategist at HSBC Holdings Plc in London, cited by Bloomberg. “But now the market is a little twitchy that there are still grounds to be nervous regarding emerging markets, which is creating volatility and a fresh bid for the yen.”
Greenback’s demand continued to be underpinned by expectations for stimulus cuts at FOMC’s two-day meeting, which concludes later today.
The greenback was pressured after US Commerce Department reported yesterday that durable goods orders plunged 4.3% in December, confounding analysts’ expectations for a 1.8% increase. Bookings for durable goods or those meant to last at least three years were downward revised in November to a 2.6% advance from a previously estimated 3.4% gain.
Core durable goods orders or those excluding the volatile transportation items, declined 1.6% in December, the largest slump since March, defying analysts’ forecasts for a 0.5% advance. Orders for core capital goods, excluding defense, fell 3.7%% last month, confounding projections for a 1% gain and after a downward revised increase of 2.7% in November.
However, data showed that the consumer confidence rose for a second month, reaching 80.7 in January, the highest since August, exceeding analysts’ forecasts of an increase to 78.0. In November the consumer confidence stood at 77.5.
The downbeat reports on the durable goods orders did little to alter the overall market expectations for stimulus cuts at FOMC’s two-day meeting, which concludes later today.
According to the median estimates by experts in a survey by Bloomberg conducted on January 10th, the Federal Open Market Committee will probably reduce the monthly pace of bond purchases from the current 75 billion USD by increments of 10 billion USD at every policy meeting to exit the program this year.
Elsewhere, EUR/USD hit a session low at 1.3629 at 12:45 GMT, after which consolidation followed at 1.3634, losing 0.27% for the day. Support was likely to be received at January 23rd low, 1.3529, while resistance was to be encountered at 28th high, 1.3688.
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