Forex - Japanese yen weaker after Ishida comments on policy options

Investing.com - The yen weakened in Asia on Thursday with comments from a bank of Japan board member suggesting hitting sustained 2% inflation in the coming year remains difficult.

Bank of Japan board member Koji Ishida said Thursday that any "necessary adjustment" to monetary policy should be saved for ensuring longer-term economic stability and should not be made just to hit the 2% inflation target in the near term.

It is too early to debate an exit strategy but the BoJ will eventually need to go easy on massive stimulus as prices move upward, he told business leaders.

Ishida is one of the four board members who voted against the Oct. 31 further easing.

USD/JPY changed hands at 118.95, up 0.08%, after the comments.

Earlier, New Zealand reported January trade data of a deficit of NZ$1.41 billion, narrower than the NZ$1.65 billion expected, while Australia said fourth quarter CAPEx fell 2.2% more than the 2.0% quarter-on-quarter fall expected.

Overnight, the dollar remained broadly lower against a basket of other major currencies on Wednesday after downbeat U.S. new home sales data and as Tuesday's remarks by Federal Reserve Chair Janet Yellen continued to weigh.

The U.S. dollar weakened 0.70% against its Australian counterpart on Wednesday in the U.S. as concluded her second day of testimony on Capitol Hill.

At one point on Wednesday, AUD/USD reached a one-month high of 0.7900 -- an increase of more than 0.75%. The pair closed on Wednesday in U.S. markets up 0.054 points to 0.7886.

In a report, the U.S. Commerce Department said new home sales fell by 0.2% to 481,000 units last month, compared to expectations for a decline of 1.3% to 475,000. New home sales in December were revised up to 482,000 units from a previously reported 481,000 units.

On Tuesday, Fed Chair Yellen said it was “unlikely” that economic conditions would warrant an interest rate increase for “at least the next couple of FOMC meetings”.

In prepared remarks during testimony to the Senate Banking Committee, Yellen added that if the economy keeps improving as the Fed expects it will modify its forward guidance, but emphasized that a modification of its language should not be read as indicating that a rate hike would automatically happen within a number of meetings.

The remarks prompted investors to push back expectations for a mid-year U.S. interest rate hike.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.04% to 94.20