News Column

Dollar moves in upper-101 yen on hope for U.S. stock, yield rebounds

July 9, 2014

Sophie Jackman

The U.S. dollar gradually gained ground in the upper-101 yen range in Tokyo on Wednesday as uncertainty over U.S. quarterly earnings reports was tempered by hopes for rebounds in U.S. stocks and Treasury yields later in the day.

At 5 p.m., the dollar fetched 101.65-66 yen with 101.52-62 yen in New York and 101.80-82 yen in Tokyo at 5 p.m. Tuesday. It moved between 101.45 yen and 101.71 yen during the day, changing hands most frequently at 101.54 yen.

The euro was quoted at $1.3614-3615 and 138.39-43 yen against $1.3607-3617 and 138.21-31 yen in New York and $1.3591-3592 and 138.36-40 yen in Tokyo late Tuesday afternoon.

The dollar traced the mid- to upper-101 yen range with a lack of major trading incentives in Tokyo after facing selling overnight in New York amid speculation that differences in interest rates between Japan and the United States would narrow following a Treasury yield fall, dealers said.

"The dollar is down primarily because Treasury yields are down," said Toru Moritani, chief market economist at Sumitomo Mitsui Banking Corp. "Treasury yields are down primarily because (U.S.) stocks are down, and stocks are down primarily because investors are adjusting their overall positions as earnings season starts."

In Tokyo trading, hopes for stock and yield rebounds in New York trading combined with resilient Japanese stock performance to help the dollar gradually pick up, nudging the upper 101 yen range in late trading, said Yuzo Sakai, manager of foreign exchange business promotion at Tokyo Forex & Ueda Harlow.

But many market players remained cautious ahead of the release later in the day of the U.S. Federal Open Market's June policy meeting minutes, with traders watching for clues on whether a recent pickup in some indicators including employment is likely to spur the central bank to bring forward its exit from loose monetary policy.

"We've already established (Fed Chair Janet) Yellen's dovish stance from her press conference after the June FOMC meeting, so it's hard to imagine the debate in the minutes will lean toward being even more dovish," Moritani said.

After a flat morning, the euro picked up slightly against the dollar in the afternoon.

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Source: Japan Economic Newswire

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