Forex - Yen gains as Yellen comments seen dovish on asset purchase taper

Investing.com - The yen weakened against the dollar in Asian trading on Thursday following overnight comments by central bank officials in the United States and Europe that signaled a dovish bias with Japan preliminary third quarter GDP the morning focus.

USD/JPY traded at 99.20, down 0.04%, ahead of Japan third quarter preliminary GDP due at 0850 local time (2350 GMT) with a forecast for a gain of 0.4% (Q/Q).

AUD/USD reached 9360, up 0.03%, ahead of inflation expectations from the Melbourne Institute at 1100 local time (0030 GMT) for November with last month's figure at 2.0%.

The nominee to replace Ben Bernanke as Federal Reserve chairman sent the dollar weaker late Wednesday as investors read Janet Yellen's prepared remarks for her confirmation hearing as dovish on the timing of a tapering for the central bank's USD85 billion a month bond buying program.

In a statement released late Wednesday, Yellen said the job market and economy are "performing far short of their potential" and there is "more work to do" on recovery.

Expectations for an imminent decision to scale back stimulus measures grew last week U.S. employment and economic growth rates beat expectations.

Yellen said the economy has made good progress, but she thinks unemployment remains "too high."

Overnight saw the trade lower against most major currencies with the euro taking a hit after ECB executive board member Peter Praet told the Wall Street Journal that the bank could cut deposit rates to below zero and commence asset purchases to lift inflation closer to its target of just below 2%.

Still, the euro managed to push back into positive territory on sentiments that currency was oversold in earlier trading and due to uncertainty ahead of incoming Federal Reserve Chair Janet Yellen's congressional testimony on Thursday.

EUR/USD traded at 1.3489, up 0.02%, in early Asian trade.

The pound saw support after the BoE's quarterly inflation report released earlier predicted that the U.K.'s unemployment rate will fall faster than it expected three months ago.

BoE Governor Mark Carney stressed that there is a "two in five chance" that it could be 7% at the end of 2014, though the central bank reiterated that the unemployment rate falling below 7% would not automatically trigger an increase in interest rates.

Still, the optimistic outlook gave the pound support.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was at 80.86, down 0.18%.

On Thursday, the U.S. is to release its weekly report on initial jobless claims.

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