Reuters: US Dollar Report: FOREX-Sterling up on BOE Carney's remarks; yen edges higher

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FOREX-Sterling up on BOE Carney's remarks; yen edges higher Sep 27th 2013, 06:50 Fri Sep 27, 2013 2:50am EDT * BOE's Carney quoted as saying no case for QE at moment * Yen firms after Japan finmin remarks on corporate tax rate * Dollar index on track to end an uninspiring week nearly flat * Fed taper uncertainty, budget cliff-hanger capping USD for now By Masayuki Kitano SINGAPORE, Sept 27 (Reuters) - Sterling edged higher on Friday after Bank of England Governor Mark Carney was quoted as saying he sees no need for more bond-buying by the central bank given signs of recovery in the British economy. Carney told the Yorkshire Post that the BoE would consider the case for more economic stimulus should the recovery falter. "But my personal view is, given the recovery has strengthened and broadened, I don't see a case for quantitative easing and I have not supported it," he said. Sterling was up 0.4 percent at $1.6096, after earlier rising as high as $1.6133. "The overall assumption among market players is that Carney is a dove, and so there is a gap between that and this kind of comment," said Daisuke Karakama, market economist for Mizuho Bank in Tokyo. Sterling has been on a firm footing in the past couple of months, as a string of strong UK data has caused investors to bring forward their expectations of when the Bank of England will raise interest rates. The dollar retreated as sterling pushed higher, with dollar index down 0.1 percent to 80.427. The currency has struggled to gain traction this week amid mounting U.S. political uncertainty and a lack of clarity over when the Federal Reserve will begin to scale back stimulus. After the surprise decision by the U.S. Federal Reserve last week to maintain its bond buying wrong-footed investors, markets have gained little clarity on when the Fed will eventually taper its stimulus. Three top Fed officials said on Thursday the central bank had confused markets over its policy outlook. Investors are now focused on Fed meetings in October and December, although some suspect the central bank could hold fire until early 2014 to make sure the U.S. recovery is firmly entrenched. A political battle in Washington over fiscal issues has also done the dollar no favours. U.S. House of Representatives Republicans on Thursday refused to give in to President Barack Obama's demand for straightforward bills to run the government beyond Sept. 30 and to increase borrowing authority to avoid a default. "We argued last week that the Fed was trying very hard to be 'credibly irresponsible'. We hope that U.S. politicians won't be 'irrationally irresponsible' and will eventually reach a sensible agreement on budget and debt matters," analysts at Societe Generale wrote in a note. YEN EDGES HIGHER Against the yen, the dollar fell 0.4 percent to 98.65 yen . The yen edged higher after Japanese Finance Minister Taro Aso said that he is not thinking of lowering the effective corporate tax rate right now. Aso's comments came in the wake of a Kyodo news agency report on Thursday that the Japanese government plans to say it will "urgently consider" cutting the corporate tax rate when it compiles a stimulus package next week. The Kyodo report had given a boost to the dollar versus the yen during Thursday's Asian trade. The issue of whether Japan will lower the effective corporate tax rate has been a recent topic for the yen, which has slid this year on the back of Japanese Prime Minister Shinzo Abe's push to reflate the economy through steps such as aggressive monetary stimulus and pro-growth structural reforms. Abe is expected to decide around Oct. 1 to proceed with a planned sales tax increase to 8 percent from 5 percent beginning next April, in a bid to rein in Japan's massive public debt. He recently instructed his cabinet to come up with measures to blunt the economic impact of the hike. The euro edged up 0.1 percent to $1.3496. Link this Share this Digg this Email Reprints

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