News Column

Dollar firmer in upper 101 yen after current account surplus

May 11, 2014

The U.S. dollar picked up within the upper 101 yen zone in Tokyo on Monday morning on Japan's weak current account surplus, but ongoing concerns about instability in Ukraine kept the currency capped under 102 yen.

At noon, the dollar fetched 101.97-98 yen compared with 101.83-93 yen in New York and 101.70-71 yen in Tokyo at 5 p.m. Friday.

The euro was quoted at $1.3755-3756 and 140.28-32 yen against $1.3751-3761 and 140.02-12 yen in New York and $1.3834-36 and 140.70-74 yen in Tokyo late Friday afternoon.

The dollar peaked just above 102 yen early in the morning as Japan's current account data for March and fiscal 2013 indicated the pace of the country's exports was lagging, said Yuzo Sakai, manager of foreign exchange business promotion at Tokyo Forex & Ueda Harlow.

"The dollar's rise was mainly due to the release before 9 a.m. of the current account surplus falling short of market expectations, denting confidence in Japan's long-term economic outlook and driving yen selling," Sakai said.

"With risk sentiment stalled over deepening worries about Ukraine, however, the dollar is likely to stay within about a one-yen range this week, without finding stable ground above 102 yen," he said.

News over the weekend of a likely referendum on secession in areas of eastern Ukraine stoked fears of civil war, he said.

Confidence in the U.S. economy ticked up slightly on the greater-than-expected rise in March U.S. wholesale inventories, released Friday, and is likely to be echoed in Tuesday's retail sales figures, but is likely to result in muted dollar buying as April's underwhelming nonfarm payrolls continue to reverberate, Sakai said.

The euro maintained its levels against the dollar near a one-month low reached Friday in New York, after European Central Bank President Mario Draghi hinted at further stimulus measures possibly in June, prompting the rise of the dollar against the yen, Sakai said.

Although ECB Vice President Vitor Constancio and policymaker Ewald Nowotny could hint at more easing when they speak at a conference in Vienna later Monday, Draghi is seen as the chief indicator of the ECB's direction and the euro is likely to halt its fall against the dollar as the fallout from his comments dissipates, he added.

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Source: Japan Economic Newswire

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