US Dollar under selling pressure ahead of Japan holiday
Frankfurt (Aug 10) The dollar declined Wednesday, primarily against the yen as Japan’s upcoming summer holiday season exaggerated the magnitude of the decline.
The U.S. dollar USDJPY, -0.71% fetched ¥101.25. That compared with ¥101.90 late Tuesday in New York.
The pound GBPUSD, +0.6768% advanced to $1.3063 from $1.3001, while the euro EURUSD, +0.6386% gained to $1.1171 from $1.1117.
The WSJ Dollar Index BUXX, -0.67% a measure of the dollar against a basket of major currencies, was down 0.39% at 86.29.
The greenback had gained after solid U.S. jobs data Friday renewed investors’ hopes that the Federal Reserve would raise interest rates within this year. But some analysts cast doubts about the Fed’s action coming as soon as September after mixed economic data recently.
“Investors bought dollar [after the U.S. jobs data]. But there are signs that they are selling ahead of the summer holiday,” said Mizuho Securities chief FX strategist Kengo Suzuki.
Tokyo-based dealers and analysts said the dollar selling prompted stop loss selling orders, giving an extra slide to the dollar against its major rivals.
Some said Japanese institutional investors sold the dollar ahead of the Aug. 15 redemption of U.S. Treasury notes before they go on Japan’s traditional summer vacation. Japanese exporters also seemed to have sold the dollar for regular commercial settlement before the summer holiday. Japan’s financial market will be closed Thursday for a national holiday.
After heavy selling on weak U.K. manufacturing data and a Bank of England policy maker’s comments indicating further interest rates cut, investors bought back the pound especially against the dollar. Bank of England policy maker Ian McCafferty suggested in an editorial Tuesday that the central bank could cut rates further if the economy declines.
Read: U.K.’s largest bank says pound could sink to $1.10 by end of 2017
In addition to a weaker dollar, Ishikawa said a falloff in Tokyo stocks prompted buying of the perceived safety of the yen. The Nikkei Stock Average closed lower.
Sourve: MarketWatch
