News Column

Dollar inches down in upper 101 yen range in morning on weak U.S. GDP

June 25, 2014



The U.S. dollar inched down in the upper 101 yen zone Thursday morning in Tokyo, weighed down by data showing a bigger-than-expected contraction in the U.S. economy in the January-March quarter.

At noon, the dollar fetched 101.74-83 yen compared with 101.82-92 yen in New York and 101.90-91 yen in Tokyo at 5 p.m. Wednesday.

The euro was quoted at $1.3633-3635 and 138.71-72 yen against $1.3624-3634 and 138.81-91 yen in New York and $1.3611-3613 and 138.70-74 yen in Tokyo late Wednesday afternoon.

The dollar inherited its weak tone seen in overnight trading in New York after revised U.S. growth figures for the first quarter came in weaker than expected.

The Commerce Department said Wednesday in a revised estimate that the U.S. economy contracted an annualized, real 2.9 percent in the January-March quarter, compared with the earlier estimated 1.0 percent decline and the worst drop in five years.

But a sharp dollar sell-off was prevented as stock markets showed a muted reaction to data as it concerned the state of the economy a couple of months ago, dealers said. U.S. stocks staged a rebound overnight and Japanese stocks followed suit in the morning.

"The GDP caused dollar selling, but the selling did not last so long," said Toru Sasaki, head of Japan rates and foreign exchange research at JPMorgan Chase Bank.

The dollar-yen pair has been confined in a narrow range near 102 yen in recent transactions. Market players are now waiting for the release of the Japanese consumer price index for May, due out Friday, dealers said.

"If the Japanese CPI turns out to be stronger-than-expected, that would undermine investors' expectations about additional easing (by the Bank of Japan) and induce yen-buying," Sasaki said, adding the Japanese inflation rate will play a key role in determining the outlook of the exchange rate hereafter.



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Source: Japan Economic Newswire


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