Investors wait on the Yen as BOJ says it may take action on the JPY's strength

The yen weakened against the dollar as Japan’s Finance Minister said the government may take action in markets after the currency’s gain to an eight month high. The dollar weakened against the euro on speculation Federal Reserve officials speaking today will signal intentions to keep record- low interest rates unchanged for an extended period, encouraging investors to sell the currency and buy higher-yielding assets.
“Japan’s policy makers can’t just let the yen rise, which will hurt companies’ profits and reduce jobs,” said Koji Fukaya, a senior currency strategist in Tokyo at Deutsche Bank AG. “Economic fundamentals are improving, boosting demand for risk taking.” “If the currency market moves abnormally, we may take necessary steps in the national interest,” Japanese Finance Minister Hirohisa Fujii said at a news conference in Tokyo today. He denied saying he tolerates a stronger yen. The USD/JPY is currently trading at 89.80 as of 8:40am, London Time.

Sterling fell on Monday as persistent bearish sentiment pushed it to a four-month low against the dollar, while broad yen buying forced it sharply lower against the Japanese currency. The euro also benefited from a broadly lower pound, rising to around 93 pence, its highest since March. Sterling later pulled back from its lows but traders said it remained vulnerable to further losses. Traders took the opportunity to drive sterling lower, viewing recent comments as suggesting British authorities would be comfortable with a weaker pound to help a fragile economy. "Sterling weakness has been caused by central bank comments," said Nicole Elliott, technical analyst at Mizuho Corporate Bank, referring to remarks last week by Bank of England Governor Mervyn King who said a weakening in sterling was helpful in rebalancing the British economy toward exports. The GBP/USD is currently trading at $1.5860

Home values in 20 U.S. metropolitan areas probably declined at a slower pace and consumer confidence improved, signs the recession is abating as the real-estate crisis eases, economists said before reports today. “The year-on-year decline in home prices is slowing considerably, showing a bottoming in home prices,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York. “We look for overall confidence to improve in the near term as the general economy rebounds.”

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