Yen weakens, euro rallies as gold-induced worries ease
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The yen tumbled against the dollar and the euro on Tuesday, reversing the previous session's sharp gains as investor anxiety triggered by a record plunge in gold prices eased, denting demand for the safe-haven Japanese currency.
A drop in U.S. consumer prices and slippage of U.S. factory output strengthened the argument for the U.S. Federal Reserve to maintain its monetary stimulus in hopes of boosting the economy.
"The CPI data reinforces the view that the Fed is likely to engage in quantitative easing for some time," said Eric Viloria, senior currency strategist at Forex.com. "That is one of the reasons for support of the markets and sentiment in general. I think that is aiding the rebound here (in the yen) and why the U.S. dollar is weak."
Finance minister and central bankers from the world's leading economies will discuss economic and financial market outlooks, including the Cyprus crisis and asset price reactions, at the talks among the Group of 20 advanced and emerging economies beginning on Thursday in Washington.
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