The yen retreated from record against the dollar and the Swiss franc weakened amid speculation policy makers in both countries will seek to curb gains in their currencies that are hurting exporters.
The yen fell the most in two weeks after Japan’s Finance Minister Yoshihiko Noda said he’s ready to take decisive steps after the currency strengthened to 75.95 against the greenback on Aug. 19.
“One of the big drivers for these two currencies has been the heightened speculation of imminent intervention by the Japanese and Swiss authorities,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd..
Noda told reporters today he’s become “more concerned about the worsening of the yen’s one-sided movements.” The government will take “bold actions if necessary and won’t rule out any possible options,” he said.
Bank of Japan Deputy Governor Hirohide Yamaguchi said yesterday he was “worrying” about the yen’s gains, noting also that a stronger currency won’t “necessarily” damage the economy.
Gains in the dollar were limited amid speculation Federal Reserve Chairman Ben S. Bernanke will signal at an Aug. 26 conference that the Fed will increase monetary stimulus to boost the economy. The central bank bought $600 billion in Treasuries from November through June in a process known as quantitative easing or QE2.
“The market focus is on Bernanke’s speech this week,” Junichi Ishikawa, a Tokyo-based market analyst at IG Markets Securities Ltd. wrote in a note to clients today. “There may be increasing downward pressure for the dollar, should he mention the possibility of QE3.”
EUR/USD printed lows around $1.4344 before it recovered to $1.4430. It failed to set above the resistance at $1.4410/15 and retreated to the lows below the figure.
GBP/USD remained within the $1.6460/$1.6510 range for some time before refreshed lows.
USD/JPY rallied to Y77.20 before sharply retreated to Y76.70.

In Europe attention will be on ZEW index at 09:00 GMT.

The UK CBI Industrial Trends Survey will announce its orders data for August at 10:00 GMT.

US data include New Home Sales at 14:00 GMT.