News Column

Dollar slips within upper 103 yen zone amid caution before U.S. GDP

August 27, 2014

The U.S. dollar slid within the upper 103 yen zone in Tokyo on Thursday morning as the release of revised April-June quarter U.S. gross domestic product data loomed and traders locked in gains from the dollar's recent rally.

At noon, the dollar fetched 103.75-83 yen compared with 103.83-93 yen in New York and 103.90-91 yen in Tokyo at 5 p.m. Wednesday.

The euro was quoted at $1.3211-3213 and 137.07-08 yen against $1.3188-3198 and 136.97-137.07 yen in New York and $1.3185-3186 and 137.00-04 yen in Tokyo late Wednesday afternoon.

Broad dollar-positive expectations for U.S. economic recovery and policy tightening by the Federal Reserve had not changed, but a combination of factors were bringing the U.S. currency down slightly in Tokyo, said Yuzo Sakai, manager of foreign exchange business promotion at Tokyo Forex & Ueda Harlow.

Ahead of the U.S. GDP data, "We're seeing dollar selling amid caution in case the GDP ends up being revised down," Sakai said.

A drop in U.S. Treasury bond yields also weighed on the dollar-yen pair, as well as a leap in the Australian dollar on surprisingly strong business spending data, and position adjustment ahead of the month's end.

The euro gained some ground against the dollar and held firm against the yen as Tokyo traders absorbed comments attributed to European Central Bank officials that the ECB will not roll out fresh easing policies at its next policy meeting next week.

"But despite this adjustment I can't imagine the euro will be aggressively bought from now, as expectations are still high that the ECB will further ease monetary policy at some point to ward off deflation," Sakai said.

With German inflation data out later Thursday serving as a bellwether of the eurozone figures, "there could be euro selling as soon as the German data are out if they are significantly weak," Sakai added.

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Source: Japan Economic Newswire

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