News Column

Dollar holds in upper 102 yen zone on U.S. housing rebound

August 19, 2014

The U.S. dollar held firm in the upper 102 yen zone in Tokyo on Wednesday morning and hit a three-week high against the yen, buoyed by upbeat U.S. housing data overnight.

At noon, the dollar fetched 102.94-95 yen compared with 102.86-96 yen in New York and 102.59-61 yen in Tokyo at 5 p.m. Tuesday.

The euro was quoted at $1.3311-3311 and 137.04-05 yen against $1.3316-3326 and 137.04-14 yen in New York and $1.3351-3352 and 136.97-137.01 yen in Tokyo late Tuesday afternoon.

The dollar came close to the 103 yen line in Tokyo but failed to rise above the threshold, while the market remained split on the likely timing of the Federal Reserve's tightening of its monetary policy, said Toru Moritani, chief market economist at Sumitomo Mitsui Banking Corp.

In New York overnight, the outlook for the U.S. economy brightened as housing starts in July rose 15.7 percent from June to a seasonally adjusted annual rate of 1.09 million, while building permits rose 8.1 percent to 1.05 million.

"But (July U.S.) consumer prices data showed a steady inflation trend. While this combination of a healthy economy but stable inflation is great for the stock market, it cannot push the dollar up dramatically as (U.S. Treasury) bond yields remain low," Moritani said.

Traders looked ahead to the release later in the day of the July Federal Open Market Committee meeting minutes and Fed chair Janet Yellen's speech at the Kansas Fed's annual conference in Jackson Hole, Wyoming, on Friday for hints from policymakers at the central bank over the timing of an interest rate hike.

The dollar was also underpinned by renewed risk appetite after Russia said President Vladimir Putin and Ukrainian counterpart Petro Poroshenko will hold talks along with European Union observers in Minsk next week.

But optimism over Ukraine could not help the euro, which dropped against the dollar in London overnight before staying flat in Tokyo.

The narrowing of the eurozone's current account surplus in June added to longstanding concerns about the region's economies, Moritani said.

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Source: Japan Economic Newswire

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