On January 3, the United States dollar rose broadly after being buoyed by comments made by outgoing Federal Reserve Chairman Ben Bernanke. The dollar was also buoyed by risk aversion but a major snowstorm blanketing the Northeast of the United States kept trade thin.
The governors of New York and New Jersey declared states of emergency after heavy snowstorm and dangerously cold conditions gripped the northeastern United States, delaying flights, paralyzing road travel, and closing schools and government offices across the region.
“You have a holiday week, which is always going to be pretty light on volume and with most of the Northeast digging itself out of the snowstorm, that has made activity especially light, even for a holiday week,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, D.C.
The US dollar fell as low as 104.05 yen, but later erased losses to last trade flat at 104.74 yen to remain below a high of five years of 105.44 yen set on Thursday.
Bernanke, who steps down as head of the U.S. central bank at month’s end, gave an upbeat assessment of the economy of the United States in coming quarters but repeated that the overall recovery “clearly remains incomplete” in the United States.
The top-performing major currency of 2013, the euro, shed 0.6 percent to 142.38 yen.
“The rebound in the yen is carryover from yesterday’s sell-off in equities and we also saw U.S. bond yields pull back from the higher end of their ranges,” Commonwealth’s Esiner said. “Both of those factors provided investors an excuse to book some profit on the yen’s decline.”
“With U.S. 10-year Treasury yields back at three percent, we have already seen the yen pare some of its overnight gains and it is trading well off its overnight highs,” he said.