News Column

Dollar remains in mid-102 yen as Ukraine fears temper sunny U.S. data

August 5, 2014

The U.S. dollar stayed in the mid-102 yen zone in Tokyo on Wednesday morning as concerns about the economic fallout from the Ukraine crisis weighed on the currency despite U.S. data showing signs of recovery in the world's largest economy.

At noon, the dollar fetched 102.53-63 yen compared with 102.54-64 in New York and 102.57-58 yen in Tokyo at 5 p.m. Tuesday.

The euro was quoted at $1.3367-3368 and 137.05-06 yen against $1.3371-3381 and 137.18-28 yen in New York and $1.3408-3409 and 137.53-57 yen in Tokyo late Tuesday afternoon.

The dollar had risen into the upper 102 yen zone in New York overnight as U.S. Treasury bond yields were buoyed by upbeat U.S. data, but its gains were erased as risk-wary traders bought up the safe-haven yen on reports Russian President Vladimir Putin has told his government to prepare retaliation against sanctions on Russia over the Ukraine crisis, said Yuzo Sakai, manager of foreign exchange business promotion at Tokyo Forex & Ueda Harlow.

U.S. factory orders were up in June, while the Institute for Supply Management's July services sector activity index rose to a record high of 58.7, up from 56 in June.

"The U.S. economy looks like it's experiencing a stable recovery, which is positive for the dollar, but Putin's comments spurred risk aversion so the dollar can't break out of the mid-102 yen zone, and stock markets took a hit too, keeping the dollar top-heavy," Sakai said.

Dramatic movements of the dollar against the yen are unlikely amid high summer's tepid trading, and a support line remains for the currency just above 102.45 yen, so it is likely to be tightly bound this week, Sakai said.

The euro moved little in Tokyo against the dollar and yen ahead of the European Central Bank's policy meeting set for Thursday.

"Concerns about eurozone deflation still run high, and while no new policy decisions are expected from tomorrow's ECB meeting, (President Mario) Draghi might hint at further easing, which could yet drive the euro down," Sakai said.

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Source: Japan Economic Newswire

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