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Dollar jumps into lower 102 yen zone on strong U.S. shares

June 1, 2014

The U.S. dollar leapt over 102 yen on Monday morning in Tokyo, getting a boost from firmer U.S. shares on Friday.

At noon, the dollar fetched 102.02-04 yen compared with 101.74-84 yen in New York and 101.63-64 yen in Tokyo at 5 p.m. Friday.

The euro was quoted at $1.3627-3629 and 139.01-08 yen against $1.3628-3638 and 138.68-78 yen in New York and $1.3611-3612 and 138.33-37 yen in Tokyo late Friday afternoon.

Fundamentals pushing the dollar and euro up against the safe-haven yen in the morning included positive risk sentiment off a strong U.S. stock market on Friday, as well as the recent rises in the U.S. Treasury yields, dealers said.

"In the current environment it's easy for U.S. Treasury bond yields to rise if positive indicators on the U.S. economic outlook come out, bringing the dollar up too," said Yuji Saito, executive director of foreign exchange at Credit Agricole Corporate & Investment Bank in Tokyo.

Traders are looking to the Institute for Supply Management's May U.S. business conditions report, out later in the day, as one such indicator, he said.

Some players also took a cue from a senior International Monetary Fund official's endorsement of the currency's value.

David Lipton, the first deputy managing director of the IMF, said in a news conference Friday in Tokyo the yen's current exchange rates are in line with fundamentals.

The IMF has shifted its assessment of the yen's depreciation amid Japan's execution of its "Abenomics" economic strategy, said Credit Agricole's Saito.

The IMF's latest view is "a shift from last year's statement that it was moderately undervalued," Saito said.

"Japan's current terms of trade are conducive to the yen getting weaker, although this is capped by unease and criticism from overseas. With this pressure removed, it will be easier for the yen to weaken further subject to fundamentals," he said.

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Source: Japan Economic Newswire

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