News Column

Dollar moves narrowly around mid-101 yen as traders await events

July 2, 2014

Ryotaro Nakamaru

The U.S. dollar traded narrowly around the mid-101 yen zone in cautious Tokyo trading on Wednesday ahead of key market events, failing to keep earlier momentum on upbeat U.S. economic data.

At 5 p.m., the dollar fetched 101.49-50 yen compared with 101.49-59 yen in New York and 101.51-52 yen in Tokyo at 5 p.m. Tuesday. It moved between 101.47 yen and 101.66 yen during the day, changing hands most frequently at 101.62 yen.

The euro was quoted at $1.3670-3672 and 138.74-78 yen against $1.3674-3684 and 138.84-94 yen in New York and $1.3692-3693 and 138.99-139.03 yen in Tokyo late Tuesday afternoon.

The dollar drifted higher against the yen in the morning after reports released overnight showed the U.S. manufacturing sector expanded for the 13th straight month in June, though at a slower pace than the previous month, and new car sales increased 1.2 percent in June from a year earlier.

But the greenback lacked traction as it met resistance in the upper 101 yen zone, with traders looking for fresh incentives to bet on the currency, said Yuji Kameoka, chief foreign exchange strategist at Daiwa Securities Co.

"Economic data due later Wednesday such as the ADP report are the focus," he said, referring to Automatic Data Processing Inc.'s June report on U.S. jobs.

Also later Wednesday, U.S. Federal Reserve chief Janet Yellen will speak at the International Monetary Fund. On Thursday, the U.S. government will release June jobs data.

"Yellen is unlikely to shift to a hawkish stance on raising interest rates in view of the recent (mixed) economic data, so I don't expect the dollar to gain much against the yen even after she speaks," said Yuzo Sakai, manager of foreign exchange business promotion at Tokyo Forex & Ueda Harlow.

The euro traded narrowly against the dollar and the yen Wednesday, a day before the European Central Bank votes on monetary policy.

The ECB is expected to stand pat on policy after unveiling unprecedented easing measures including a negative deposit rate at its June meeting, but any hints of further action from ECB President Mario Draghi at a press conference after Thursday's policy meeting may weigh on the euro, Daiwa Securities' Kameoka said.

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Source: Japan Economic Newswire

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