Japanese Yen Drops As Fed Comments Soothe Aggressive Tightening Concerns

The Japanese yen fell against its most major counterparts in the Asian session on Wednesday, as Asian shares are mostly higher, tracking gains on Wall Street overnight, following comments from several Federal Reserve officials playing down the possibility of aggressive rate hikes this year.

Philadelphia Fed President Patrick Harker said that he supported four 25 basis point rate hikes for this year, but a 50 basis point move is not preferred.

Atlanta Fed President Raphael Bostic said on Tuesday that there is a real risk of inflation expectations drifting higher and thus an action to reduce accommodation is required soon.

St. Louis Federal Reserve President James Bullard advocated lifting rates at the meetings in March and May, but opposed the idea of a half-percentage point move next month.

Investors cheered the positive earnings news and the latest data on U.S. manufacturing and job openings showing a resilient economy. Google parent Alphabet reported better-than-expected fourth-quarter earnings and revenue in after-hours trading.

The yen depreciated to an 8-day low of 124.60 against the franc and a 2-day low of 155.22 against the pound, after rising to 124.29 and 154.93, respectively in early trades. The next likely support for the yen is seen around 126.00 against the franc and 157.00 against the pound.

The yen touched a 1-week low of 81.99 against the aussie, down from a high of 81.66 seen at 5:00 pm ET. If the yen continues its fall, 83.00 is possibly seen as its next support level.

The yen edged down to 129.40 against the euro and 90.51 against the loonie, off its early highs of 129.19 and 90.34, respectively. Next key support for the yen is likely seen around 132.00 against the euro and 92.00 against the loonie.

In contrast, the yen advanced to 114.58 against the greenback and 76.01 against the kiwi, following its prior low of 114.80 and a 6-day low of 76.28, respectively. The yen is seen finding resistance around 112.5 against the greenback and 75.00 against the kiwi.

Looking ahead, Eurozone CPI for January is due in the European session.

U.S. ADP private payrolls data for January is scheduled for release at 8:15 am ET.

Canada building permits for December will be featured in the New York session.