News Column

Dollar trades in lower 101 yen in morning amid Ukraine, Gaza concerns

July 17, 2014

The U.S. dollar traded in the lower 101 yen range Friday morning in Tokyo as traders stepped back from risk-averse yen buying that had been spurred by a Malaysia Airlines jet crash near the Ukraine-Russia border, apparently shot down, and rising tensions in Gaza.

At noon, the dollar fetched 101.38-43 yen compared with 101.12-22 yen in New York and 101.49-51 yen in Tokyo at 5 p.m. Thursday.

The euro was quoted at $1.3525-3526 and 137.11-13 yen against $1.3521-3531 and 136.82-92 yen in New York and $1.3533-3534 and 137.35-39 yen in Tokyo late Thursday afternoon.

The dollar and euro had declined against the yen overnight in New York after the plane carrying 298 passengers and crew from Amsterdam to Kuala Lumpur crashed.

The Israeli military said Thursday it had begun a ground attack in the Gaza Strip, the first since a large-scale offensive in 2009.

The U.S. currency fell to 101.06 yen, its lowest level since July 10, and the European common currency marked a fresh five-month low of 136.69 yen, both just before the start of Tokyo trade.

Both the Ukrainian government, which is backed by the United States and European Union, and the Donetsk People's Republic, a pro-Russian separatist state in eastern Ukraine, denied involvement in the plane's crash.

But "many traders are concerned that the incident will lead to further sanctions against Russia (by the West), perhaps especially harsh ones because there were Westerners aboard," said Daisuke Karakama, chief market economist at Mizuho Bank.

"We need to be on the lookout for those kinds of developments," which would drive the yen higher, he said.

U.S. 10-year Treasuries were being bought on risk-off sentiment over the deepening geopolitical worries, driving the yield down past the 2.5 percent mark and lessening the dollar's appeal.

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Source: Japan Economic Newswire

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