News Column

Dollar wavers in upper 101 yen in caution after U.S. bond yield fall

July 7, 2014

The U.S. dollar traded narrowly within the upper 101 yen zone in Tokyo on Tuesday morning in the wake of an overnight drop on reduced U.S. Treasury bond yields, with trading blunted by a cautious mood ahead of hints at the U.S. Federal Reserve's outlook.

At noon, the dollar fetched 101.78-79 yen compared with 101.83-93 yen in New York and 102.04-06 yen in Tokyo at 5 p.m. Monday.

The euro was quoted at $1.3604-3604 and 138.45-48 yen against $1.3600-3610 and 138.55-65 yen in New York and $1.3585-3586 and 138.63-67 yen in Tokyo late Monday afternoon.

The dollar remained under pressure after slipping in New York overnight following a drop in U.S. Treasury yields as traders bought up bonds, said Shinichiro Kadota, foreign exchange strategist at Barclays Bank.

Despite positive June U.S. jobs data released Thursday, many market participants hold that Fed chair Janet Yellen is "unlikely to change her stance on moving forward 'return to normal' monetary policy such as interest rate hikes, based on her record of dovish comments," Kadota said.

Trading was subdued as a wait-and-see mood prevailed ahead of the release on Wednesday of the minutes of the Federal Open Market Committee's June policy meeting, Kadota said.

Expecting that the minutes will show some degree of split opinions, Kadota said the "key point is how (Fed policymakers) have been debating their exit strategy from loose monetary policy, and their timeline for the exit."

The dollar is heavily supported at around 101.7 yen and should not drop below that level ahead of the minutes' release, he added.

The euro traded horizontally against the dollar after a slight gain overnight.

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Source: Japan Economic Newswire

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