News Column

Dollar bound in lower 102 yen zone as risk-off mood continues

August 10, 2014

The U.S. dollar traded narrowly in the lower 102 yen zone in Tokyo on Monday morning amid tepid trading and a lack of fresh incentives despite geopolitical risk factors having abated somewhat over the weekend.

At noon, the dollar fetched 101.15-16 yen compared with 101.99-102.09 yen in New York and 101.69-70 yen in Tokyo at 5 p.m. Friday.

The euro was quoted at $1.3400-3401 and 136.89-90 yen against $1.3403-3413 and 136.78-88 yen in New York and $1.3380-3381 and 136.06-10 yen in Tokyo late Friday afternoon.

The dollar was tightly bound in the morning, having inched up out of the upper 101 yen zone as weekend developments saw a slight resurgence of the risk sentiment depressed by the Ukraine crisis and conflict in northern Iraq, said Toshiyuki Suzuki, senior market economist at Bank of Tokyo-Mitsubishi UFJ.

Tensions over the Ukraine crisis ebbed as Russian troops were reported to have pulled back from positions near the country's border with Ukraine, while Israel and Palestinian authorities agreed early Monday to a further 72-hour cease-fire in Gaza.

"Risk appetite has grown a little with these developments, but these conflicts in Ukraine and the Middle East aren't going away any time soon, so the mood is still risk-off," Suzuki said.

The next few weeks are likely to be devoid of central bank policy announcements as well as data with a potential for surprises, making traders hesitant to take bold trades regardless of geopolitical developments, Suzuki added.

The euro held firm against the dollar and yen in Tokyo, with little incentive to buy the common currency while the specter of the Ukraine crisis' effect on the eurozone economy remains, Suzuki said.

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Source: Japan Economic Newswire

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