News Column

Dollar stays in upper 103 yen amid caution over Ukraine crisis

August 28, 2014

The U.S. dollar was stuck in the upper 103 yen range Friday morning in Tokyo as investors remained alert over escalating tensions in Ukraine despite positive U.S. economic data overnight.

At noon, the dollar fetched 103.71-73 yen compared with 103.71-81 yen in New York and 103.75-77 yen in Tokyo at 5 p.m. Thursday.

The euro was quoted at $1.3180-3181 and 136.69-71 yen against $1.3176-3186 and 136.70-80 yen in New York and $1.3198-3200 and 136.93-97 yen in Tokyo late Thursday afternoon.

Stronger-than-expected revised U.S. gross domestic product data for the April-June quarter provided support for the dollar, but sentiment was dampened by the worsening Ukraine situation after Ukrainian President Petro Poroshenko said Russia has moved troops and heavy artillery into the country's territory, dealers said.

"Though hopes for a U.S. economic recovery remain intact, the dollar's advance was capped by yen buying to avert risks stemming from rising tensions in the Ukraine," said Kengo Suzuki, chief foreign exchange strategist at Mizuho Securities Co.

"Looking back on August, it has been a tug of war between the U.S. macro economy and geopolitical risks," he added.

The currency market was little influenced by a batch of Japanese economic data released early Friday, including consumer prices rising 3.3 percent in July from a year earlier for the 14th straight monthly gain.

The data, which also included output and unemployment figures for July, did not surprise market participants, who thought weaker-than-expected results would have stirred speculation over further monetary easing by the Bank of Japan and triggered yen selling, dealers said.

"Unemployment and output data were slightly softer than projections, but they were not weak enough to immediately heighten expectations of additional easing," Suzuki said.

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Source: Japan Economic Newswire

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