US Dollar edges higher vs. yen in cautious trade
Frankfurt (May 16) The dollar was moderately higher against the yen on Monday, with investors avoiding making major moves given a lack of fresh trading cues.
The U.S. currency USDJPY, +0.27% was changing hands at ¥108.90, compared with ¥108.65 late Friday in New York.
Investors are watching data and events this week, including January-March Japan gross domestic product data due Wednesday.
Tokyo-based dealers and analysts said a weak result will increase hopes that the government will implement extra stimulus to push up the dollar against the yen. The median forecast from a survey of 20 economists by the Wall Street Journal was for inflation-adjusted growth of 0.3%.
“We can’t find a decisive market mover” for now, said Marito Ueda, director at FX Prime by GMO.
“We saw a media report about sales tax postponement, which was quickly denied by the chief government spokesman,” said Ueda. This sparked jitters because of the uncertainty over that authorities might do next, which includes the possibility of more easing by the Bank of Japan or fresh fiscal stimulus from the government.
The Nikkei reported in its Saturday morning edition that Prime Minister Shinzo Abe has decided to push back a consumption tax increase set for next April, judging it a threat to efforts to pull the world’s third-largest economy out of deflation.
“If other countries start moving towards competitive devaluation, it will start a chain reaction.”
U.S. Treasury Secretary Jacob Lew
With a slew of selling orders capping the dollar’s gains around ¥110, “investors need fresh trading cues from the Japan side to bring the yen weaker,” said Ueda.
The dollar continued to struggle to rise after the U.S. Treasury Secretary Jacob Lew on Friday warned of the risk of currency battles hurting the global economy.
“If other countries start moving towards competitive devaluation, it will start a chain reaction,” said Lew. The comments came after Tokyo’s repeated verbal warnings about the Japanese currency’s strength, as a strong yen adds to the headwinds threatening to pull the economy back into contraction.
Among other currency pairs, the euro EURUSD, +0.0707% was at $1.1318, compared with $1.1310. The common currency EURJPY, +0.34% was at ¥123.26 from ¥122.82.
The pound GBPUSD, +0.0070% was trading at $1.4341 compared with $1.4365.
The WSJ Dollar Index BUXX, +0.00% a measure of the dollar against a basket of major currencies, was flat at 86.89.
Source: MarketWatch
