News Column

Dollar holds in upper 102 yen zone awaiting U.S. data, Fed speeches

August 18, 2014

The U.S. dollar held firm in the upper 102 yen zone in Tokyo on Tuesday morning, as cautious anticipation of U.S. inflation data and Federal Reserve chair Janet Yellen's upcoming speech kept traders from sending the currency higher despite upbeat U.S. data.

At noon, the dollar fetched 102.60-62 yen compared with 102.51-61 yen in New York and 102.47-48 yen in Tokyo at 5 p.m. Monday.

The euro was quoted at $1.3356-3357 and 137.06-10 yen against $1.3359-3369 and 137.00-10 yen in New York and $1.3385-3387 and 137.16-20 yen in Tokyo late Monday afternoon.

Positive U.S. housing market data for August released overnight supported the dollar in New York, but the currency did not rise further in Tokyo amid a wait-and-see mood ahead of July U.S. consumer prices due later in the day and Yellen's speech on Friday, said Yuzo Sakai, manager of foreign exchange business promotion at Tokyo Forex & Ueda Harlow.

The National Association of Home Builders/Wells Fargo Housing Market Index, a measure of confidence in the residential construction market, rose to a seven-month high of 55 in August.

A firm inflation trend shown in the consumer price data is likely to underpin the dollar by stoking expectations the Fed will bring forward an interest rate hike to reflect U.S. economic recovery, Sakai said.

"Still, even when the dollar has cleared the 103 yen line recently, it hasn't been able to find a firm footing there, and I expect it will take something more significant than a firm inflation figure to push the dollar out of the upper 102 yen zone," Sakai said.

Yellen's keynote speech at the Kansas Fed's annual conference in Jackson Hole, Wyoming is broadly expected to be on the dovish side, but "we can't rule out subtle hints at an early rate hike, which would drive dollar buying," he added.

The euro held largely flat against the dollar and yen in Tokyo after slipping slightly overnight as the Bundesbank's monthly report painted a gloomy picture of Germany's economy in July, with the Ukraine crisis still weighing on the European common currency, Sakai said.

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Source: Japan Economic Newswire

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