News Column

Dollar steadies in mid-102 yen zone in calm after U.S. jobs data

August 4, 2014

Sophie Jackman

The U.S. dollar traded narrowly in the mid-102 yen zone in Tokyo on Monday amid a lack of trading incentives, as the dust settled on underwhelming U.S. jobs data released Friday that dashed expectations of an early interest rate hike by the Federal Reserve.

At 5 p.m., the dollar fetched 102.58-59 yen compared with 102.56-66 yen in New York and 102.94-96 yen in Tokyo at 5 p.m. Friday. It moved between 102.48 yen and 102.73 yen during the day, changing hands most frequently at 102.66 yen.

The euro was quoted at $1.3429-3430 and 137.76-80 yen against $1.3423-3433 and 137.73-83 yen in New York and $1.3379-3380 and 137.73-77 yen in Tokyo late Friday afternoon.

The dollar traded in a narrow range in Tokyo amid a dearth of fresh incentives, having slid from the upper 102 yen to the mid-102 yen range in New York on Friday following the release of weaker-than expected July U.S. jobs data which dampened expectations some traders had for an early rate hike, said Yuzo Sakai, manager of foreign exchange business promotion at Tokyo Forex & Ueda Harlow.

The 209,000 new nonfarm jobs added in July undershot market expectations and the unemployment rate inched up to 6.2 percent. But broad optimism on the U.S. economy meant the reaction was limited, Sakai said.

"This week the dollar should stay in the mid- to upper 102 yen zone; it would take a major risk event to bring it back below 102 yen," he said.

Traders will find it difficult to move the dollar decisively up or down against the yen for some time, with no Federal Open Market Committee meeting set for August, said Minori Uchida, head of Tokyo global market research at the Bank of Tokyo-Mitsubishi UFJ.

"The employment situation in the United States is clearly improving, but there are still some lagging indicators that (Fed Chair Janet) Yellen has in her sights, namely wage growth and number of long-term unemployed," Uchida said.

In lieu of an FOMC meeting, traders will be closely watching Yellen's speech at the Kansas City Fed's annual Jackson Hole conference later in the month for clarity on her assessment of the economy's recovery and timeline for monetary policy tightening, he added.

Among the coming week's central bank policy meetings, the Bank of Japan's meeting Friday is not expected to bring any surprises, but the European Central Bank's Thursday meeting will be carefully watched for hints at further loosening of monetary policy to combat the fallout on the eurozone from the Ukraine crisis, Sakai said.

"The euro may be sold on the back of statements by (ECB President Mario) Draghi or other members if they hint at quantitative easing or at eurozone economies taking a significant hit from added sanctions on Russia," he said.

The euro held steady in Tokyo, having risen slightly in tandem with the dollar's fall against the yen as traders sold the U.S. currency.

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Source: Japan Economic Newswire

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