News Column

Dollar steady in lower 102 yen zone awaiting U.S. inflation data

August 17, 2014



The U.S. dollar traded narrowly in the lower 102 yen zone Monday morning in Tokyo as traders looked ahead to the release of U.S. consumer price data to clarify the outlook for the U.S. economy and the Federal Reserve's likely policy response.

At noon, the dollar fetched 102.28-33 yen compared with 102.31-41 yen in New York and 102.52-53 yen in Tokyo at 5 p.m. Friday.

The euro was quoted at $1.3397-3398 and 137.02-03 yen against $1.3395-3405 and 137.07-17 yen in New York and $1.3376-3377 and 137.13-17 yen in Tokyo late Friday afternoon.

A wait-and-see mood kept the dollar in a tight range against the yen in Tokyo ahead of U.S. July consumer price data due Tuesday, with many expecting a mild slowdown in inflation, said Yuji Saito, executive director of foreign exchange at Credit Agricole Corporate & Investment Bank in Tokyo.

"Most speculation points to (an annual inflation figure of) 1.9 percent, down from June's 2.1 percent, and traders have sold the dollar accordingly, but a figure of 2 percent or higher is likely to fuel dollar buying," Saito said.

The dollar had dropped rapidly from the mid-102 yen range in New York on Friday on flagging U.S. Treasury yields after reports Ukrainian and Russian forces had clashed within Ukraine's borders, but Russia's denial of the intrusion and a subsequent lull in fresh news out of Ukraine prevented the dollar falling further in Tokyo, Saito said.

Geopolitical concerns aside, the U.S. currency will likely stay bound within the 102 yen zone until traders are convinced the Federal Reserve is ready to take a more hawkish policy tack in the face of economic recovery, Saito said.

"In order for the dollar to clear 103 yen at this point, we would need a much stronger-than-expected July inflation figure, or significantly hawkish opinions of policymakers in the (Federal Open Market Committee) July meeting minutes due next Wednesday," he said.

The euro moved narrowly against the dollar and yen in Tokyo, with a dearth of fresh eurozone data and strong support for the euro at the $1.3320 mark likely to keep the currency stable this week, Saito said.



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Source: Japan Economic Newswire


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