CURRENCIES: Dollar Falls, Hovers Around 102 Yen

By Dow Jones Business News, 
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By Saumya Vaishampayan, MarketWatch

NEW YORK (MarketWatch) -- The dollar fell against major rivals Wednesday, hovering around 102 yen.

The Bank of Japan is scheduled to meet this week, with expectations for no change in monetary policy. The central bank implemented its easing program, including an expansion of bond purchases, in April 2013 as part of its efforts to reach 2% inflation.

The dollar (USDJPY) fell to Yen102.04 from Yen102.33 late Tuesday, pushing below Yen102 during the session. That's the lowest level since May 30, according to FactSet. The euro (EURJPY) fell to Yen138.08 from Yen138.62 in the prior session, trading at the lowest level since February 5.

A sustained move below Yen138 in the euro-yen pair could set up for a run on the 2014 low of Yen136.23, said Robert Lynch, a currency strategist at HSBC, in a note.

The euro (EURUSD) weakened to $1.3531 from $1.3548 late Tuesday.

The euro's move lower is "a development more consistent with the expected effect (bearish) that the series of policy easing measures and announcements taken by the central bank last week, and contrary to the initial resiliency in the currency that had led some/many to question whether there would be much impact from the ECB's more accommodative policy commitments," said Lynch.

The European Central Bank on Thursday slashed interest rates, pushing the deposit rate into negative territory, and announced a number of liquidity measures aimed at encouraging banks to lend more. The ECB's end goal is to revive the region's inflation rate, which is well below the central bank's medium-term target of just under 2%.

The ICE Dollar Index (DXY), a gauge of the dollar's strength against six rivals, fell to 80.784 from 80.802 late Tuesday. The WSJ Dollar Index , which pits the dollar against a wider basket of rivals, inched down to 73.36 from 73.39.

The pound (GBPUSD) rose to $1.6791 from $1.6753 late Tuesday. The U.K. unemployment rate dropped to 6.6% in the three months to April from 6.8% in the three-month period ended March. The continued decline in unemployment supports the view that labor-market slack is shrinking. Whether or not that will result in a sooner-than-expected hike in interest rates is unclear since the Bank of England looks at a variety of gauges, including wage growth. Average earnings including bonuses rose just 0.7% in the three months to April, down from 1.9% growth in the three months to March.

The Australian dollar (AUDUSD) inched up to 93.84 U.S. cents from 93.75 U.S. cents.

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This article appears in: Forex and Currencies , Commodities

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