TOKYO, Nov 24 — The yen was on the back foot while riskier currencies were supported today on rising optimism following news US President-elect Joe Biden is expected to tap former Federal Reserve Chair Janet Yellen as US Treasury Secretary.
Also underpinning the risk-on mood, President Donald Trump gave the head of the General Services Administration the go-ahead to proceed with a transition for Biden's administration despite plans to continue with legal challenges.
Yellen has called for increased government spending to boost the US economy out of a deep recession brought on by the coronavirus and has frequently cited growing economic inequality in the United States as a threat to America's values and its future.
“One thing is for sure and that is there is unlikely to be as many Fed-Treasury spats,” said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.
“Those Fed lending facilities for municipal funding, the corporate bond market and Main Street will be coming back quickly after the December 31 expiration date.”
Last week US Treasury Secretary Steven Mnuchin let some of the Fed's lending programmes expire at the end of this year, opening a feud with the Fed, which said those emergency facilities are important to support the economy.
The safe-haven yen traded at 104.49 per US dollar, having slipped about 0.6 per cent overnight.
The US dollar, which tends to weaken against riskier, less liquid currencies on positive market sentiment, also flirted near 12-week lows, though it has managed to find some technical support.
The US dollar's index recovered a touch to 92.530 after dropping to 92.013 yesterday, the lowest since September 1. A conclusive break on the dollar index below support at around 92 could bring about a fresh downturn, analysts said.
The US currency's safe-haven appeal was also dented after AstraZeneca said yesterday that its Covid-19 vaccine could be about 90 per cent effective and it would prepare to submit data to authorities around the world that have a framework for conditional or early approval.
The euro was flat at US$1.18395, lacking momentum to clear a hurdle at US$1.19.
The Australian dollar ticked up 0.15 per cent to US$0.7295 while the New Zealand dollar also edged 0.10 per cent higher to test a two-year high of US$0.6967 hit yesterday.
The British pound held firm near a 12-week high against the dollar and six-month high versus the euro, propped up by bets Britain and the European Union would clinch a Brexit trade deal.
London and Brussels this week continue their negotiations to agree a deal on their future trading relationship, though time is now running very short as Britain's post-Brexit transition period ends in fewer than six weeks.
The pound stood at US$1.3330, having hit a high of US$1.3396 yesterday. Against the euro, it traded at 0.8887 to the euro, near its six-month high touched about two weeks ago. — Reuters
