US Dollar Stronger on Prospects of Bond-Buying Reduction

The US dollar continued to rise today after Federal Reserve Chairman nominee Janet Yellen said that asset purchases “will not continue indefinitely”, fueling speculations that the Fed will scale down its bond buying program. Gains were limited as US macroeconomic data was rather poor.
Yellen explained that reduction of bond purchases does not mean that interest rates will raised soon:

I consider it imperative that we do what we can to promote a very strong recovery. It’s important not to remove support, especially when the recovery is fragile and the tools available to monetary policy, should the economy falter, are limited given that short-term interest rates are at zero.

Indeed, economic reports from the United States did not give cause for excessive optimism. The trade balance deficit unexpectedly widened from $38.7 billion in August to $41.8 billion in September. The federal budget posted a deficit of $91.6 billion in October after demonstrating a surplus of $75.1 billion in September.
EUR/USD was down from 1.3484 to 1.3447 as of 23:53 GMT today. GBP/USD was little changed at 1.6051. USD/JPY climbed from 159.32 to 160.85, trading the highest rate since August 2009.

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