The dollar was buoyant versus the Japanese yen on Friday as forex traders squared their short positions bought ahead of a meeting of central bankers in Jackson Hole, Wyoming.
With Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi speaking today, market participants are eying clues on more Fed rate hikes this year and the timing of its balance sheet tapering by the European Central Bank. Yellen’s speech is due at 1600 CET and Draghi will speak at 2100 CET.
USD/JPY lifted to 109.78 overnight after gaining 0.5 percent yesterday. The greenback was set to end 0.3 percent stronger against the yen on the week, during which it had slipped to as low as 108.635 yen on geopolitical tensions stemming from the Korean Peninsula.
Trader focus has shifted from geopolitics and political turmoil in Washington to monetary policy for the time being which is giving the dollar a breather. The single currency awaited ECB Draghi's speech, though most market participants expect he will drop few hints before the central bank's next policy review on Sept. 7, when some expect he will announce plans to start reducing stimulus.
The common currency has gained nearly 14 percent against the dollar this year and some observers were focusing on whether Draghi would choose to talk down the currency's strength. EUR/USD traded around 1.1785 at the start of European trade.
