News Column

Dollar falls to mid-101 yen as U.S. Treasury yields slips

July 17, 2014

Ryotaro Nakamaru

The U.S. dollar fell to the mid-101 yen zone Thursday in Tokyo as traders locked in gains after the U.S. currency's recent rally.

At 5 p.m., the dollar fetched 101.49-51 yen compared with 101.62-72 yen in New York and 101.69-70 yen in Tokyo at 5 p.m. Wednesday. It moved between 101.44 yen and 101.67 yen during the day, changing hands most frequently at 101.65 yen.

The euro was quoted at $1.3533-3534 and 137.35-39 yen against $1.3521-3531 and 137.50-60 yen in New York and $1.3553-3554 and 137.82-86 yen in Tokyo late Wednesday afternoon.

The dollar had little support from U.S. long-term interest rates, with the benchmark 10-year Treasury yield falling to 2.51 percent compared with 2.55 percent on Wednesday.

"U.S. interest rates rose and then fell again yesterday and fell even further this morning, and that's weighing (on dollar-yen)," said Shinichiro Kadota, foreign exchange strategist at Barclays Bank.

The U.S. currency had earlier risen on comments by Fed chief Janet Yellen during testimony to Senate and House committees. Yellen on Tuesday told upper house lawmakers that continued strength in the U.S. labor market could lead to a quicker rise in the central bank's benchmark rate, which currently sits near zero.

The euro on Thursday tumbled to a five-month low of 137.17 yen and a one-month low of $1.3518 on the back of the shared currency's fall against the pound.

The stance of the European Central Bank, which unveiled large-scale stimulus in June and is keeping the possibility of asset purchases on hand, contrasts with the Bank of England, which may be looking to start exiting its stimulus program.

The euro is falling toward key support at $1.35, said Yasuaki Amatatsu, market analyst at the Bank of Tokyo-Mitsubishi UFJ. "If it breaches that point, it'll be down to $1.33 in no time."

Eurozone inflation data for June to be released later Thursday will likely stay near a preliminary estimate of 0.5 percent and should not compel major currency moves, Amatatsu said. The reading falls short of the ECB's target of just under 2 percent.

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Source: Japan Economic Newswire

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