LONDON: The yen and the Aussie reversed course slightly on Tuesday in Asia with solid Japanese manufacturing data and comments in a letter released by the Federal Reserve chief in focus.
Federal Reserve Chair Janet Yellen said Monday she and her colleagues hope and expect the economy will continue to expand and if that is the case, it will be appropriate to raise interest rates.
“Most of us expect the pace of that normalization to be gradual,” Yellen said in a letter to Ralph Nader released by the Federal Reserve.
Nader penned an open letter to Yellen Oct. 30, calling on the policymaking Federal Open Market Committee to raise the fed funds rate off the zero lower bound where it has been since December 2008.
USD/JPY changed hands at 122.78, down 0.05%, while AUD/USD traded at 0.7195, up 0.03%. Japan reported its PMI for November rose to 52.8, compared to 52.1 seen and up from 52.4 in October.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell 0.08% to 99.76.
Overnight, the dollar remained higher against the other major currencies on Monday, despite the release of disappointing U.S. housing sector data, as expectations for a December rate hike by the Federal Reserve continued to support the greenback.
The U.S. National Association of Realtors said that existing home sales decreased by 3.4% to 5.36 million units last month from 5.55 million in September. Analysts had expected existing home sales to fall 2.3% to 5.40 million units in October.
But demand for the dollar continued to be underpinned by expectations that the Fed is on track to raise interest rates next month.
New York Fed President William Dudley said Friday that there is a “strong case” for hiking rates at the central bank’s next meeting in December as long as economic data continues to remain solid.
Also on Monday, the Federal Reserve Board of Governors scheduled a closed-door meeting, held under expedited procedures, to review the discount rates charged by its regional banks.
