US Dollar resumes losing trend against yen as Nikkei gives up gains
Tokyo-Japan (Jan 21) The yen pared earlier losses against the U.S. dollar and other rivals during Asia trade on Thursday, with Tokyo stocks remaining volatile, which causing buying of the Japanese currency.
The dollar USDJPY, -0.01% weakened to ¥116.79 after advancing as high as ¥117.48. That compares with ¥116.89 late Wednesday in New York.
Despite the U.S. stocks selloff overnight, Tokyo CLH6, -0.74% stocks gained ground after the opening bell. But the benchmark Nikkei Stock Average NIK, -2.43% turned negative and closed down 2.4%. The Shanghai Composite Index SHCOMP, -3.23% closed 3.2% lower.
After the dollar touched a low of ¥115.97 at one point on Wednesday, its lowest level since Jan. 16, 2015, some currency market participants are now saying the dollar has been oversold against the yen.
“It looks the dollar has found a solid [new] support below ¥116,” said Koji Fukaya, chief executive at FPG Securities. But noting that U.S. stocks would be a key to the dollar’s upside momentum, Fukaya said the dollar will likely “head toward ¥118” once U.S. stocks show signs of bottoming out.
Read: Ray Dalio says U.S. dollar facing a ‘short squeeze’
Earlier in the session, remarks by a close aide to Prime Minister Shinzo Abe helped push up the dollar, amid speculation that the Bank of Japan would ease its monetary grip at its policy setting meeting on Jan. 28 and 29.
“Conditions for additional easing have fallen into place,” the aide told The Wall Street Journal earlier this week, citing plummeting Tokyo stocks, the strengthening yen and Japan’s lackluster growth and weakening inflation expectations.
BOJ Governor Haruhiko Kuroda said at a parliamentary testimony that the central bank isn’t currently considering using a policy of negative interest rates.
The euro EURJPY, +0.16% was at ¥127.30 after touching a high of ¥127.69, compared with ¥127.30 late Wednesday. The U.K. pound GBPJPY, -0.64% was at ¥165.42 midday, compared with its intraday high of ¥166.80.
The risk-sensitive Australian dollar AUDJPY, +0.06% was at ¥80.52 midday after rising to ¥81.65.
In other news, the euro EURUSD, +0.1285% was changing hands at $1.0900, almost unchanged from $1.0891, ahead of the European Central Bank’s policy meeting scheduled later Thursday.
The WSJ Dollar Index BUXX, +0.12% a measure of the dollar against a basket of major currencies, was up 0.1% at 91.67.
Source: MarketWatch
