News Column

Dollar bound in mid-101 yen range in calm after FOMC minutes

July 9, 2014

The U.S. dollar traded narrowly Thursday morning in the mid-101 yen range in Tokyo, as market participants held off on bold trades amid a lack of major events following the previous night's hints from the U.S. Federal Reserve monetary policy outlook.

At noon, the dollar fetched 101.52-53 yen, compared with 101.60-70 yen in New York and 101.65-66 yen in Tokyo at 5 p.m. Wednesday.

The euro was quoted at $1.3648-3648 and 138.55-56 yen against $1.3637-3647 and 138.62-72 yen in New York and $1.3614-3615 and 138.39-43 yen in Tokyo late Wednesday afternoon.

The dollar held in a narrow range, little affected by Japan's weaker-than-expected May machinery orders data, as some wobbles in the figures are expected, said Yuji Saito, executive director of foreign exchange at Credit Agricole Corporate & Investment Bank in Tokyo.

Dropping U.S. Treasury bond yields after the release of the Federal Open Market Committee's June policy meeting minutes had sent the dollar down within the mid-101 yen range in New York overnight.

But the effect of the minutes, which lacked the hawkish hints some market participants were expecting, is likely temporary, Saito said, with the longer-term upward trend of the dollar against the yen still in place as the Fed tapers its stimulus, while the Bank of Japan shows no sign of doing the same.

For the rest of the week the dollar should be top-heavy against the yen as currencies across Asia strengthen in the wake of the U.S.-China Strategic and Economic Dialogue in Beijing ending today, Saito said.

"In the face of U.S. complaints about manipulating the yuan, China is likely to tone down its dollar-buying intervention, giving traders an incentive to buy up the yuan as well as other Asian currencies, and this should extend to the yen," he said.

The euro traded in a boxed range in Tokyo after a slight climb overnight.

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Source: Japan Economic Newswire

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