News Column

Dollar stuck in upper 101 yen before Fed policy, U.S. data

July 28, 2014

May Masangkay

The U.S. dollar was stuck in a narrow range in the upper 101 zone Monday in Tokyo as market players shied away from taking bold positions ahead of the U.S. central bank's policy meeting and a batch of U.S. economic data due later this week.

At 5 p.m., the dollar fetched 101.87-88 yen compared with 101.81-91 yen in New York and 101.89-91 yen in Tokyo at 5 p.m. Friday. It moved between 101.76 yen and 101.91 yen during the day, changing hands most frequently at 101.78 yen.

The euro was quoted at $1.3431-3432 and 136.83-87 yen against $1.3425-3435 and 136.70-80 yen in New York and $1.3463-3467 and 137.19-23 yen in Tokyo late Friday afternoon.

The dollar stayed in the upper 101 yen range in Tokyo, almost unchanged from its levels in New York last Friday, when the U.S currency hit a three-week high of 101.94 at one point.

"Market attention is focused on trading cues this week such as the U.S. Federal Reserve's policy decision and U.S. gross domestic product for April to June, making it hard for market participants to actively trade," said Yuzo Sakai, manager of foreign exchange business promotion at Tokyo Forex & Ueda Harlow.

Shinichiro Kadota, foreign exchange strategist at Barclays Bank, said market participants are also wary ahead of the decision of the Fed's policy-setting Federal Open Market Committee on Wednesday and the release of crucial July U.S. jobs data on Friday.

"The participants are looking at two aspects -- the timing of tapering and an interest-rate hike," Kadota said.

While market players have digested news about the U.S. central bank's likely end of its stimulus in October, they have yet to determine whether upcoming data will speed up the rate hike, Kadota said.

Dealers said the dollar continues to be underpinned by a recent batch of economic data from the United States, including stronger-than-expected durable goods orders for June released last Friday, which has reinforced a sanguine outlook of the health of the world's largest economy.

Tokyo Forex's Sakai said the dollar needs more market cues to test higher ground against the yen as market sentiment is weighed down by lingering geopolitical risks, notably the Ukraine crisis.

The euro moved narrowly against the dollar and yen due to concerns that economies in Europe could be affected by possible additional sanctions imposed on Moscow given the economies' proximity and their nations' reliance on Russian gas, the dealers said.

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Source: Japan Economic Newswire

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