By Hiroyuki Kachi
The dollar was almost flat against the yen in Asian trade
Thursday, with investors reluctant to take strong positions given a
lack of fresh cues.
As of 0450 GMT, the U.S. dollar inched down to Y101.45 from
Y101.48 late Wednesday in New York.
Despite the absence of direct trading cues, geopolitical
concerns, such as the Ukraine situation, are still weighing heavily
on the minds of market participants. In the latest development,
pro-Russian separatists shot down two Ukrainian ground attack
planes Wednesday over a town close to where Malaysia Airlines
Flight 17 crashed last week.
But moderate gains in European stock markets overnight suggest
the risk aversion mood is not growing.
Against that backdrop, the dollar-yen continued to remain in a
narrow range and had a muted reaction to a bigger than expected
monthly trade deficit in Japan.
An ordinary currency market pattern is buy or sell on
expectations and then lock in profits after verifying the fact, but
extremely low volatility in recent days has made jittery investors
reluctant to take positions on expectations, said Daisaku Ueno,
chief forex strategist at Mitsubishi UFJ Morgan Stanley
Securities.
Referring to low volatility in the dollar-yen trading pair, "I
think much more concrete evidence is needed to help activate a
market which is experiencing a longstanding stalemate," said Mr.
Ueno, adding that the market participants may not be able to get a
clear sense of direction for the currency trade pair until they
confirm diverging monetary policy between the U.S. and Japan as
early as the coming autumn.
In contrast, other currency pairs in the Asia Pacific region
have recently proven themselves more vulnerable to economic data
and events, in a sign that investors are shifting their money away
from the dollar-yen's stubbornly low volatility.
The Australian dollar went up to as high as $0.9472 at one
point, after a solid reading in the HSBC China Manufacturing
Purchasing Managers' Index, a gauge of nationwide manufacturing
activity.
Currencies closely tied to growth in China such as the Aussie
dollar are bought when solid data from the world's second-largest
economy is released.
Also on Thursday, the New Zealand dollar fell to a low of
$0.8581 after the country raised interest rates for the fourth time
this year but signaled it wouldn't introduce further increases
until the impact of the latest rate increase has been assessed.
Elsewhere, the euro fell to $1.3460 from $1.3462, while the
common currency weakened to Y136.55 from Y136.62, ahead of the
release of July euro zone PMI data.
The WSJ Dollar Index, a measure of the dollar against a basket
of major currencies, was up 0.06% at 73.17.
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 101.43-46 101.46-51 -0.04 101.58 101.46 -3.67
EUR/USD Euro 1.3459-62 1.3462-65 -0.02 1.3463 1.3456 -2.07
GBP/USD U.K. 1.7032-34 1.7042-45 -0.06 1.7043 1.7032 +2.87
USD/CHF Switzerland 0.9022-26 0.9020-24 +0.02 0.9029 0.9022 +1.05
USD/CAD Canada 1.0738-42 1.0726-30 +0.11 1.0742 1.0724 +1.11
AUD/USD Australia 0.9448-50 0.9455-59 -0.09 0.9470 0.9436 +5.99
NZD/USD New Zealand 0.8586-90 0.8697-703 -1.29 0.8700 0.8586 +4.46
Euro Rates
EUR/JPY Japan 136.54-58 136.61-66 -0.05 136.73 136.56 -5.65
Source: ICAP PLC
Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com