US Dollar churns in mixed action as investors warily eye U.K. referendum

Frankfurt (Jun 17)  The U.S. dollar USDJPY, +0.01%  advanced to as high as ¥104.84 against its Japanese counterpart earlier in the session before changing hands more recently at ¥104.26. This compares with ¥104.25 late Thursday in New York.

After touching its 22-month low against the yen yesterday, “short covering (of the dollar) is easier to kick in,” said Yasuaki Amatatsu, senior analyst of global markets research at Bank of Tokyo-Mitsubishi UFJ.

But with investors dialing back their expectations for an early rate increase by the Federal Reserve and the yen vulnerable to come under selling pressure as haven assets, “a bunch of investors is looking for (the dollar’s) downside,” said Amatatsu.

Euro-dollar EURUSD, +0.2672%  was at $1.1255 from $1.1226 Thursday.

Broadly, the WSJ Dollar Index BUXX, -0.28% a measure of the dollar against a basket of major currencies, was down 0.2% at 86.20.

The dollar climbed early in the morning session, as comments from Japan’s finance minister Taro Aso sparked intervention jitters among investors.

Aso toughened his currency rhetoric Friday, saying the government must prevent further progress in what he called a “one-sided, sharp and speculation-driven” appreciation of the yen. He vowed to “act more firmly than before if necessary”, against rapid yen movement.

But the greenback failed to maintain the gains after lack of clearer statements from other officials later in the morning. A top Japanese currency official told reporters that Japan’s finance ministry and the Bank of Japan had after a meeting reached a common understanding that exchange rates have been “very volatile.”

Some said the assassination of a British lawmaker, who campaigned against Britain leaving the EU, increased speculation that the Brexit is less likely, sending the pound and the euro higher. The killing prompted a temporary halt to official campaigning ahead of the referendum. But both euro and the pound trimmed much of their earlier gains by midday in a sign that the speculation was only short-lived.

Euro-yen EURJPY, +0.26%  traded at ¥117.39 after touching an intraday high of ¥118.10. That compares with ¥117.04 late Thursday. The yen was also weaker, but trimmed losses, against such currency peers as the U.K. pound and the Australian dollar.

Source: MarketWatch