Yen strengthens again; US dollar waits for Fed decision

Story link: Yen strengthens again; US dollar waits for Fed decision

The Japanese yen strengthened for the third session in a row on Wednesday, helped by investors who were less likely to make risky investments as worry continued over troubles in the subprime mortgage sector in the United States. The yen was also helped by higher readings than anticipated on retail sales in Japan in May. The gain in sales brought with it speculation about when the Bank of Japan will raise interest rates again.

At midday in New York, the yen had added 0.7 percent each against the US dollar, sterling, and the euro, while it had even bigger gains against the Australian and New Zealand dollars. The yen traded at ¥122.40 versus the greenback, while it was at ¥244.42 in relation to sterling and was valued at ¥164.55 against the euro. The yen added 1.3 percent to ¥93.10 versus the New Zealand dollar and was up 1.4 percent to ¥102.70 against the Australian dollar.

The Norwegian krone was 0.6 percent stronger against both the US dollar and the euro after Norway’s central bank increased interest rates to 4.5 percent, as had been expected. The krone was at a 10-month high of NKr7.9705 against the euro, while it found a 15-year high of $5.9385 versus the greenback.

The US dollar was quiet ahead of Thursday’s rate decision from the Federal Reserve, sitting at $1.3440 in relation to the euro and gaining just 0.1 percent to $1.9220 against sterling. However it did do better against the New Zealand dollar when the kiwi fell 0.6 percent to $0.7605 versus the greenback after the Reserve Bank of New Zealand issued a statement on intervention which left most analysts expecting an interest rate increase to 8.25 percent sooner rather than later.