Dollar softens against the yen

A dovish approach by chairman of the US Federal Reserve, Ben Bernanke, has pushed the dollar lower. Overnight the greenback slid to its lowest level in nearly three weeks with the dollar index losing 0.6 per cent to hit 82.639. This saw some recovery in the euro, which ended at $1.3140.

Although the dollar is down on its high of 101.53 yen, recorded earlier this month, it has managed to gain 0.3 per cent to hit 99.35 yen. In a statement later the Fed is expected to confirm that a pull-back on bond buying will not equate to the central bank’s easy money policy being tightened.

This means that interest rates are likely to remain at a record low for some time to come. However, as long as economic data remains positive, tapering of quantitative easing could still go ahead before the year is out.

The Bank of England is due to release minutes of a policy meeting that will prove how dovish new governor Mark Carney will be. The pound is currently close to its lowest level in four months next to the euro. The single currency is currently trading at 86.935 pence.

Elsewhere, the Australian dollar is holding its own ahead of a possible interest rate cut in August. The Aussie is currently trading at $0.9223.