By Hiroyuki Kachi
The dollar trimmed earlier gains against the yen after hitting
its highest level in nearly six years in Asian trade Friday, with
investors awaiting U.S. jobs data later in the day.
As of 0450 GMT, the dollar was at Y105.31 compared with Y105.26
late Thursday in New York after briefing touching Y105.71 -- its
highest level since October 2008.
The dollar extended its gains after the European Central Bank
unexpectedly moved to cut its main policy rates and announced
additional measures in an attempt to stimulate the flagging economy
in the 18-country region. Investors selling the euro to buy the
dollar help push the greenback up against the yen. The euro was at
$1.2932 in Asia from $1.2944.
In addition, the diverging monetary policy stances and
differentials in economic conditions in the U.S. and Japan also
served as a catalyst for the dollar's rise. The U.S. recovery
appears to be gaining momentum, an important factor for the Federal
Reserve's timeline for raising interest rates as early as in 2015.
Meanwhile, the Bank of Japan Thursday kept its policy on hold and
stuck to its optimistic economic assessment despite growing signs
of turmoil.
The fact that the dollar hit its highest level since the global
economic crisis of 2008 is significant, said Junichi Ishikawa
market analyst at IG Securities. "This will send a signal to the
market that further advances in the dollar lie ahead...The focus
for now is whether the dollar can reach Y106," said Mr.
Ishikawa.
The dollar may hit Y106.50 after the U.S. jobs data and then
"could reach Y108-Y109 by the end of this month," with less selling
pressure partly from Japanese exporters, said Michiyoshi Kato,
senior vice president of forex sales at Mizuho Bank.
In other currency trade, meanwhile, the euro was at Y136.20 from
Y136.25.
Given the euro's comparative weakness against other currencies,
the euro will likely ratchet down against the yen to test its
downside," said Shinji Kureda, head of FX trading group at Sumitomo
Mitsui Banking Corp.
As many Japanese companies assumes the common currency will
average Y135 for this fiscal year ending March 31, a level below
what appears to be the break-even point needs to be monitored with
caution, said Mr. Kureda.
For instance, export bellwether Canon Inc. expects the euro will
average Y135 for the second half of the business year ending
December. It also said each one yen change in the euro/yen to
either lift or cut its group operating profit for 2014 by Y1.7
billion.
The WSJ Dollar Index, a measure of the dollar against a basket
of major currencies, was up 0.08% at 75.55.
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 105.29-32 105.25-28 +0.04 105.70 105.24 0.00
EUR/USD Euro 1.2931-34 1.2942-46 -0.09 1.2946 1.2922 -5.91
GBP/USD U.K. 1.6308-12 1.6329-35 -0.13 1.6332 1.6288 -1.49
USD/CHF Switzerland 0.9325-26 0.9317-21 +0.07 0.9335 0.9319 +4.43
USD/CAD Canada 1.0878-80 1.0872-77 +0.04 1.0890 1.0874 +2.42
AUD/USD Australia 0.9340-42 0.9348-51 -0.09 0.9349 0.9334 +4.78
NZD/USD New Zealand 0.8286-88 0.8304-08 -0.24 0.8306 0.8272 +0.79
Euro Rate
EUR/JPY Japan 136.18-22 136.22-26 -0.03 136.61 136.16 -5.90
Source: ICAP PLC
Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com