The dollar fell for a second day against the yen as regional Federal Reserve Bank presidents prepare to speak, after last week unexpectedly maintaining the pace of asset purchases that tend to debase the currency.
The yen advanced against all of its 16 major peers and strengthened the most in more than two weeks against the euro. The 17-member currency was little changed versus the dollar after Germany’s voters put Angela Merkel on course for an election win. Treasury two-year note yields have dropped about 20 basis points after rising to 0.53 percent on Sept. 6, the highest since May 2011.
“The dollar support from short-term yields has definitely evaporated with a major repricing,” said Derek Halpenny, European head of global-markets research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “That’s going to make dollar-yen difficult to push to the upside in the short term, until we get at least a clear picture in terms of some flow data from the U.S. and some more rhetoric from the Fed.”
The dollar weakened 0.4 percent to 98.95 yen at 6:06 a.m. New York time after dropping 0.1 percent on Sept. 20. The greenback was little changed at $1.3516 per euro. The yen advanced 0.5 percent versus the common currency, the most since Sept. 6, to 133.72.
Fed Bank of New York President William C. Dudley, who votes on monetary policy, and Atlanta Fed President Dennis Lockhart and Dallas Fed President Richard Fisher are scheduled to speak today.
Fed policy makers said on Sept. 18 that they want more proof of an economic recovery before curbing their bond-buying program, known as quantitative easing, surprising analysts predicting a $5 billion cut to Treasury purchases.
Fed Bank of St. Louis President James Bullard said in a Sept. 20 interview on Bloomberg Television that a “small” reduction in the pace of the central bank’s $85 billion of monthly bond purchases is possible in October.
The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major currencies, was little changed at 1,012.49 after tumbling 1 percent last week.
Chart: WorldWideMarkets Flash Trader