US Dollar regains ¥119; euro slips

Madrid-Spain (Feb 18)  The dollar recovered Wednesday, as Bank of Japan Gov. Haruhiko Kuroda left the door open for more easing, and as concerns about Greece crisis appeared to fade somewhat.

The dollar USDJPY, +0.03%   rose to 119.28 yen, compared with ¥119.25 late Tuesday in New York. The euro EURUSD, -0.30%  fell to $1.1365 from $1.1418 following news that Greece will seek an extension to its loan agreement. The common currency EURJPY, -0.27% also fell to ¥135.60 from ¥136.18.

As expected, the Bank of Japan stood pat on its policy and painted a rosier picture of economic conditions, keeping a brave face despite recent poor growth data.

The dollar, which had reached ¥119.36 mid-morning in Asia, quickly lost momentum, hitting ¥118.88 with some investors disappointed by the central bank’s decision. But the falloff proved to be short-lived, and the U.S. currency soon stabilized above ¥119.

Stocks edged higher in afternoon trading Tuesday, as investors kept an eye on talks between Greece and its creditors. Meanwhile, General Motors was in court Tuesday to maintain a bankruptcy shield.

“I think there was selling by foreign investors who were still expecting something” from the BOJ, said Marito Ueda, director of FX Prime byGMO, adding that the reaction was a typical knee-jerk response to the meeting.

In a press conference, the BOJ’s Kuroda kept the door open to further easing, he ruled out additional near-term stimulus, a public move itself considered unusual, The Wall Street Journal reported. He signalled a desire for a stable yen, which suggested officials have taken on board public complaints about weakening of the nation’s currency.

In Europe, meanwhile, the standoff between Athens and its creditors appeared to ease. Greece will seek an extension to its loan agreement from the rest of the eurozone Wednesday, an official with knowledge of the situation said. The extension could be for a period of four to six months to prevent the current rescue deal from expiring at the end of the month.

Meanwhile, the British pound GBPUSD, +0.55%  moved higher against the dollar after the rate-setting U.K. Monetary Policy Committee voted unanimously in February to stay pat on the central bank’s benchmark interest rate at 0.5% and bond-buying program, according to minutes of the panel’s meeting. But there were some diversions between members over the next move. The pound was last at $1.5426, ahead of a level around $1.536 seen ahead of that meeting.

The WSJ Dollar Index BUXX, +0.08% a measure of the dollar against a basket of major currencies, was up 0.1% to 85.48.

Source: MarketWatch