By Hiroyuki Kachi
The dollar was lower against the yen in Asia trade Friday, with
news of a new Ebola patient in New York prompting investors to
switch to the perceived safety of the Japanese currency.
At last check, the dollar (USDJPY) slipped to Yen107.99 from
Yen108.28 late Thursday in New York. Meanwhile, the euro (EURUSD)
was at $1.2652 from $1.2647.
The situation cleared to some extent, as a fresh round of global
data including eurozone PMI reduced fears about the global economic
slowdown, causing U.S. Treasury yields to rise.
However, news of the Ebola patient fed risk aversion, prompting
buying of the yen, considered a safe harbor in uncertain times.
A doctor who returned to New York City recently after treating
Ebola patients in West Africa tested positive for the virus
Thursday. New York Mayor Bill de Blasio said authorities had been
preparing for an Ebola case for weeks and followed new protocols
"very precisely."
In addition, investors were reluctant to make major moves ahead
of big events such as the outcome of European stress tests
scheduled for Sunday, as well as the policy meetings of the Federal
Open Market Committee and the Bank of Japan next week.
"The Yen108-level is still a bit too high" given two-year U.S.
bond yields are staying below 0.4%, said Minori Uchida, head of
Tokyo global markets research at Bank of Tokyo-Mitsubishi UFJ. U.S.
yields are a major force for the dollar's upward momentum.
"With the dollar coming back to Yen108 level for the first time
in 10 operating days in Tokyo, there are many investors willing to
sell," said Uchida. In addition, the news of the Ebola patient
hardly provides the kind of environment to keep the dollar at the
Yen108-level, he added. However, he noted that investors would
likely shrug off the news should the incident be successfully
contained.
The dollar will likely remain vulnerable to selling with
investors moving to lock in profits, especially outside Japan, as
they are sensitive to the risk of terrorism and Ebola and ahead of
next week's big events, said Yuji Saito, executive director of
foreign exchange at Credit Agricole in Tokyo.
"I expect the dollar to stay stable above the Yen108-level after
the FOMC meeting," Saito said.
The dollar will likely keep its uptrend intact next week,
despite possible ups and downs after the FOMC decision, he added.
He expects the greenback to trade in a Yen107 to Yen110 range.
In other currency trade, the euro was at Yen136.63, compared
with Yen136.89.
The WSJ Dollar Index , a measure of the dollar against a basket
of major currencies, was down 0.09% at 77.72.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires