The JPY fell versus all of its major currencies as Asian equities ended two days of losses, boosting demand for higher-yielding currencies. The USD climbed against the JPY after Federal Reserve Chairman Ben S. Bernanke said the U.S. recovery is moving at a “moderate” pace and he sees consumers in the world’s largest economy “coming back.” The Fed will raise its benchmark interest rate from a record low before the U.S. economy returns to full employment or inflation surges, Bernanke added during a question-and-answer session. The EUR rose after yesterday touching a four-year low versus the USD and its weakest level in more than eight years against the JPY on expectation Europe’s common currency has fallen too rapidly.
The EUR dropped 2.5 percent last week against the USD as credit-default swaps on France, Austria, Belgium and Germany also climbed, sending the Markit iTraxx SovX Western Europe Index of contracts on 15 governments to a record. The cost of insuring against losses on Hungarian sovereign debt surged after comments from government official’s sparked concern Europe’s sovereign debt crisis may be spreading to Eastern Europe. The European currency reached record lows after officials in Hungary’s government last week compared the country to Greece while claiming the previous administration lied about public finances.
Today, the EUR/USD pulled a bit back after starting the week with record losses. The most traded pair pulled back from a record low of 1.1876 and trades currently around 1.1962. The EUR/JPY pulled a bit back as most Asian stocks gained, helping the MSCI Asia Pacific Index gained 0.5 percent. The EUR/JPY gained back to 109.64 after it reached a low of 108.04 yesterday, which was the lowest level since the end of 2001.
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