News Column

Dollar edges down in upper 101 yen, upside capped on Iraq violence

June 24, 2014

The U.S. dollar edged down in the upper 101 yen zone Wednesday morning in Tokyo, with its upside capped amid concerns about escalating tensions in Iraq and lackluster stock market performance.

At noon, the dollar fetched 101.89-90 yen compared with 101.92-102.02 yen in New York and 101.96-98 yen in Tokyo at 5 p.m. Tuesday.

The euro was quoted at $1.3602-3606 and 138.60-61 yen against $1.3601-3611 and 138.70-80 yen in New York and $1.3605-3607 and 138.72-76 yen in Tokyo late Tuesday afternoon.

The dollar was top-heavy throughout the morning in Tokyo after its overnight spike prompted by upbeat U.S. housing and consumer confidence data proved to be short-lived.

The U.S. Commerce Department said sales of new single-family homes jumped 18.6 percent to a seasonally adjusted annual rate of 504,000 in May, while the Conference Board Consumer Confidence Index rose from 82.2 in May to 85.2 in June, its highest level since January 2008.

Dealers said concerns about violence in Iraq kept investors risk-averse and weighed on stock markets at home and abroad.

Following overnight declines in U.S. shares, the 225-issue Nikkei Stock Average fell 64.95 points, or 0.42 percent, from Tuesday, to end the morning at 15,311.29.

"Although the U.S. data turned out to be strong, U.S. stocks and Treasury yields fell and the Nikkei followed suit. Under such circumstances, dollar selling and yen buying took the upper hand," said a senior dealer at a major Japanese bank.

With Japanese exporters' sell orders for the dollar lined up at around 102 yen, the U.S. currency has been unable to rise beyond its recent boxed range, he added.

The currency market showed muted reaction to the Japanese government's new economic growth strategy, approved by the Cabinet the previous day, as most had already been reported, dealers said.

Under the strategy, the government has pledged to promote deregulation of farming, employment and medicine, and also promised to cut Japan's 35 percent corporate tax rate to below 30 percent within a few years from fiscal 2015.

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Source: Japan Economic Newswire

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