TOKYO: The yen rose against its major counterparts in Asia on Wednesday as investors' appetite for risk faded ahead of an address later in the session by Federal Reserve Chairman Ben Bernanke, a day after he flustered markets with mixed signals.
Bernanke will address the House Financial Services Committee, following his testimony on Tuesday to the US Senate Banking Committee that was downbeat on the US economy, but contained no explicit outline of stimulus steps.
The euro seesawed overnight, initially dropping following the Fed chief's remarks. But the European unit then rose to session highs, and continued to push higher in Asian trade, before giving up gains.
"There was no special catalyst. Stocks started selling off, and trading turned to a risk-off tone," said a foreign-exchange specialist at a foreign brokerage in Tokyo.
The euro was last at $1.2282, down 0.1 percent and moving away from Tuesday's one-week high of $1.2317, but still well off a two-year low of $1.2162 hit last week.
Against the yen, the euro reached a session high of 97.32 yen but then faded to buy 97.01 yen, moving back toward a six-week low of 96.17 yen touched on Monday.
The dollar bought 78.99 yen, moving back toward a one-month low of 78.68 yen hit on Monday. Traders said the dollar was likely to face pressure from selling by Japanese exporters on any move over the 80-yen level, with the July 5 high of 80.09 yen seen as a major resistance point.
'FRIGHTENING THE FED'
Bernanke said the Fed stands ready to offer more stimulus as needed, but stopped short of signaling near-term action. He said the US recovery is being held back by Europe's debt crisis and uncertainty surrounding US fiscal policy.
"It's becoming really clear-cut that the US economy has slowed, admittedly on account of the euro zone, but the pace of the slowdown is clearly frightening the Fed. It's very clear that more easing is coming, and that's dollar-negative," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York.
Some strategists have suggested that in addition to a possible third round of large-scale bond purchases, known as quantitative easing or QE3, the Fed might follow the example of European Central Bank, which lowered the interest paid to banks on their excess reserves deposited with the central bank.
Wilkinson said the Reserve Bank of Australia's publication on Tuesday of minutes from its meeting in July suggested investors had reason to hold on the Australian dollar.
The minutes showed that central bank refrained from cutting interest rates at its July meeting after data showed the domestic economy had more momentum than first thought.
The Aussie hit a session high of $1.0325, just shy of resistance at the July 5 high of $1.0330, but was last down 0.1 percent at $1.0307.
It also rose to a record high against the euro of A$1.1884 overnight, but came off slightly to A$1.1907.
The euro rose off an overnight low of 78.27 pence versus sterling, its lowest since November 2008. It was last buying 78.52 pence.
Investors shrugged off minutes of the Bank of Japan's June 14-15 policy meeting released on Wednesday, at which some members said Japanese sentiment could suffer if Europe's debt problems led to a rise in the yen.
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