Thursday's Major Currency Pairs

The European Central Bank is concerned that investors could be spooked by next year’s bank balance-sheet reviews and stress tests unless their results are carefully timed. As the ECB prepares to take over supervision of all euro-area lenders in 2014, it will begin a three-phased analysis of the institutions coming under its umbrella. As laid out by Executive Board member Yves Mersch last month, the bank will start with a risk review before analyzing banks’ balance sheets and conducting stress tests in collaboration with the London-based European Banking Authority. Euro rose to 1.3535.
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GBP/USD
The pound strengthened to an eight-month high against the dollar and euro as Bank of England minutes showed officials saw no need for additional monetary stimulus as the economy improves. The U.K. currency advanced for a fourth day versus the greenback as the minutes of the September meeting showed “no member judged that further stimulus was appropriate at present.” In August, some policy makers saw a “compelling” case for a loosening of policy. U.K. government bonds fell, with 10-year yields approaching the highest level since July 2011. The U.S. Federal Reserve ends a two-day meeting today amid speculation it will slow asset purchases.
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USD/JPY
Takahide Kiuchi, the Bank of Japan board member most openly critical of its monetary policy, said the central bank may come under pressure to expand unprecedented easing, doing more harm than good to the economy. Kiuchi, 49, has consistently proposed since Governor Haruhiko Kuroda’s first meeting in April that the BOJ shouldn’t aim to achieve its 2 percent inflation target in two years. He warned today of the potential adverse impact on the nation’s economy of an expansion of monetary stimulus. Yen rose to 98.50.
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USD/CAD
Canada’s dollar rose to a three-month high after the U.S. Federal Reserve unexpectedly refrained from reducing the $85 billion pace of monthly bond purchases and will keep pumping money into the economy to boost growth. The central bank left unchanged its guidance that it will probably hold its target interest rate near zero “at least as long as” unemployment exceeds 6.5 percent, so long as the inflation outlook is no higher than 2.5 percent. The currency pared earlier losses versus its U.S. peer after Bank of Canada Governor Stephen Poloz said in a Vancouver speech that growing confidence has brought the country near a “tipping point” for companies to boost investment. Oil and stocks climbed.
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