Currency vol gives Yellen housewarming gift

Fed View

“The FOMC’s broader commitment to gradual tapering and an extended period of low policy rates should be the broader take- away for EM currencies,” HSBC’s Lynch said. “Not only should downside risks to EM currencies be limited, but a reiteration of the Fed’s still-dovish policy stance may even provide some degree of support.”

The yen has appreciated 4.2 percent this year, after sliding 17 percent in 2013, according to Bloomberg Correlation- Weighted Indexes that track 10 developed-nation currencies. The euro dropped 0.1 percent since Dec. 31, while the dollar gained 0.7 percent.

Japan’s current-account deficit, the broadest measure of trade, widened to 638.6 billion yen, the most in data going back to 1985, according to the finance ministry report. Overseas investors cut their holdings of the nation’s bonds by 1.26 trillion yen in the final month of last year, the most since September, the data showed.

Krone Gains

The krone strengthened for a second day against the euro after Statistics Norway said consumer prices rose 2.3 percent in January from a year earlier, after increasing 2 percent in December. Economists surveyed by Bloomberg news predicted an increase of 2 percent.

Norway’s currency rallied 0.6 percent to 8.3701 per euro, the biggest gain since Jan. 17, and advanced 0.7 percent to 6.1333 per dollar.

Australia’s unemployment rate climbed to 5.9 percent last month, the highest since June 2009, according to a Bloomberg survey before the statistics bureau report on Thursday.

The Aussie weakened 0.2 percent to 89.42 U.S. cents after appreciating to 89.99 cents on Feb. 7, the strongest level since Jan. 14.

“There are two currencies that have really moved,” Marc Chandler, a currency strategist in New York at Brown Brothers Harriman & Co., said in a phone interview. “One is Norway, on the back of stronger-than-expected inflation numbers, and the other currency that’s moved is the Aussie, and that’s primarily correcting last week’s gains, but also on the back of Toyota saying it’s cutting production by 2017.”

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