The dollar fell against the yen in Asia trade Thursday, as fears
over the global economy pushed down stock markets and prompted an
adjustment of the greenback following the rapid gains of recent
days.
As of 0450 GMT, the dollar was at Y108.74 from Y108.89 late
Wednesday in New York, after falling as low as Y108.55. The
greenback remained well below its six-year high Y110.09 set
Wednesday afternoon.
Renewed concerns about global economic growth emerged following
anemic readings for the manufacturing sector the U.S. and Germany
fueled heavy selling on Wall Street overnight.
Weaker risk sentiment carried through into Asia trade hours,
with steep falls in the Nikkei Stock Average reinforcing buying of
the safe-haven yen against the dollar. The benchmark index was 2.1%
lower in the afternoon session, falling below the 16000 mark for
the first time in two weeks.
Still, the dollar's downside against the yen showed some support
from Japanese importers and others looking to pick up the greenback
on dips.
"The dollar's quick downturn after touching Y110 in such a short
time means upward momentum is certainly dwindling," said Shusuke
Yamada, chief Japan FX strategist at Merrill Lynch Japan
Securities.
"I don't think the dollar will proceed beyond the Y110 mark,"
Mr. Yamada said. Although the greenback may temporarily touch the
threshold should U.S. jobs data out Friday prove upbeat, such an
uptick would be short-lived, he said.
Mr. Yamada said the U.S. currency would likely be hovering
around Y108 around the end of this year, below its current level
since the yen is already relatively weak in terms of its effective
exchange rate using a weighted average of currency rates among
Japan's trading partners.
Secondly, the recent rally that brought the dollar 8% higher
against the yen suggests diverging monetary policy between the U.S.
and Japan has been fully factored in, he said.
Finally, there may be jawboning about the dollar-yen move from
authorities in the U.S. and Japan that could generate some
resistance to another sharp upward advance of the greenback.
Shinji Kureda, head of FX trading group at Sumitomo Mitsui
Banking Corp., said the dollar may have entered an adjustment
phase, after its sprint across the Y110 line Wednesday, as "a
feeling of accomplishment" spreads within the currency market.
With U.S. economic data so far this week lacking vigor,
investors are feeling less bullish. "The downside risk [for the
dollar] is increasing," Mr. Kureda said.
With investors awaiting what will come out of the European
Central Bank policy meeting later Thursday after disappointing
eurozone economic indicators, the euro was at $1.2659 from $1.2624.
The common currency was at Y137.63, compared with Y137.45.
The WSJ Dollar Index, a measure of the dollar against a basket
of major currencies, was down 0.30% at 77.58. Interbank Foreign
Exchange Rates At 00:50 EST / 0450 GMT
Latest
Previous
%Chg
Daily
Daily
%Chg
2150 GMT
High
Low
12/31 Dollar Rates USD/JPY Japan
108.72-74
108.87-91 -0.15
109.11
108.56 +3.25 EUR/USD Euro
1.2658-60
1.2622-25 +0.28
1.2674
1.2616 -7.90 GBP/USD U.K.
1.6234-38
1.6184-89 +0.31
1.6249
1.6180 -1.94 USD/CHF Switzerland
0.9534-38
0.9557-61 -0.24
0.9567
0.9528 +6.79 USD/CAD Canada
1.1084-88
1.1161-66 -0.69
1.1166
1.1072 +4.37 AUD/USD Australia
0.8807-10
0.8737-41 +0.80
0.8815
0.8726 -1.19 NZD/USD New Zealand
0.7878-82
0.7785-90 +1.19
0.7927
0.7768 -4.15
Euro Rate EUR/JPY Japan
137.63-66
137.44-54 +0.11
138.11
137.32 -4.90 Source: ICAP PLC
Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com
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