News Column

Dollar lingers in upper 101 yen as current account fallout ebbs

May 12, 2014

Sophie Jackman

The U.S. dollar picked up within the upper 101 yen zone on Monday in Tokyo on Japan's weak current account surplus, but ongoing concerns about instability in Ukraine erased the currency's gains, keeping it below 102 yen.

At 5 p.m., the dollar fetched 101.89-91 yen compared with 101.83-93 yen in New York and 101.70-71 yen in Tokyo at 5 p.m. Friday. It moved between 101.82 yen and 102.05 yen during the day, changing hands most frequently at 102.00 yen.

The euro was quoted at $1.3770-3771 and 140.31-35 yen against $1.3751-3761 and 140.02-12 yen in New York and $1.3834-3836 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 current account surplus falling short of market expectations, denting confidence in Japan's long-term economic outlook and driving yen selling," Sakai said.

Confidence in the U.S. economy ticked up slightly on the greater-than-expected rise in March U.S. wholesale inventories data, released Friday, and is likely to be echoed in Tuesday's retail sales figures, he added.

But geopolitical concerns over Ukraine will keep traders cautious this week even if fundamentals point to dollar buying, said Yuji Saito, executive director of foreign exchange at Credit Agricole Corporate & Investment Bank in Tokyo.

Although fears of a military clash in Ukraine over the weekend were not realized, a referendum on secession was held in the country's east Sunday, stoking fears of civil war, he said.

"The worse it gets in Ukraine, the more likely we will see dollar selling and euro buying."

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, which also lifted 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, Sakai added.

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Source: Japan Economic Newswire

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