News Column

Dollar firm in lower 104 yen range ahead of policy meetings, data

September 1, 2014

Ryotaro Nakamaru

The U.S. dollar stayed firm in the lower 104 yen range on Monday in Tokyo ahead of central bank meetings in Japan and the eurozone and economic data due throughout the week.

At 5 p.m., the dollar fetched 104.14-16 yen compared with 104.06-16 yen in New York and 103.82-84 yen in Tokyo at 5 p.m. Friday. It moved between 104.10 yen and 104.21 yen during the day, changing hands most frequently at 104.17 yen.

The euro was quoted at $1.3131-3133 and 136.75-79 yen against $1.3127-3137 and 136.65-75 yen in New York and $1.3169-3170 and 136.72-76 yen in Tokyo late Friday afternoon.

The dollar was supported by speculation over the European Central Bank's monetary policy ahead of a meeting of its Governing Council on Thursday.

"Some market players are beginning to say the ECB will ease further this week," said Kengo Suzuki, chief foreign exchange strategist at Mizuho Securities Co. The Bank of Japan, meanwhile, is expected to stand pat on policy at its two-day meeting through Thursday.

"There's also speculation the U.S. Federal Reserve will make a hawkish tweak in their forward guidance this month," Suzuki said, adding expectation of moves that could lead to wider interest rate gaps between the United States and Europe is prompting traders to buy the dollar and sell the euro.

Fed chair Janet Yellen said in August the central bank could raise its benchmark rate sooner than envisioned if the U.S. labor market continues to improve quicker than expected. Nonfarm employers have added more than 200,000 workers monthly for the past six months and the jobless rate remains low at 6.2 percent.

The latest U.S. labor figures for August are due on Friday. "Unless the data completely undershoot market expectations, they should support the dollar's upward trajectory," said Masanobu Ishikawa, general manager of spot foreign exchange at Tokyo Forex & Ueda Harlow.

Until then, traders will have a spate of U.S. economic data to chew on, including August manufacturing data due Tuesday.

The euro slipped to a fresh one-year low of $1.3119 on Monday as concerns over the turmoil in Ukraine added to downward momentum from the dovish ECB outlook.

Ukrainian media reported pro-Russian separatists fired on Ukrainian ships in the Sea of Azov on Sunday, a day after the United States and the European Union announced readiness to place new economic sanctions on Moscow over the conflict. The rebels and Kiev are set to restart peace talks on Monday.

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Source: Japan Economic Newswire

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