Dollar Firms Vs Yen in Asia as Risk Sentiment Improves

By Dow Jones Business News, 
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By Tatsuo Ito

The dollar rose against the yen in Asia Thursday as investors snapped up the greenback amid improved risk sentiment, buoyed by a rising stock market.

Initially, traders had expected calm amid the traditional Japanese summer holiday. But sudden bids from overseas and domestic investors pushed the greenback as high as Y102.66, the highest since Aug. 5.

At 0450 GMT, the dollar was at Y102.58 against Y102.45 late Wednesday in New York.

Traders couldn't find clear reasons behind the move. But some think the purchases might be based on the renewed view that the U.S. economy has performed better than the Japanese, which suffered a sharp contraction in the April-June quarter. Currencies with strong economies and higher rates normally gain as they offer greater investment returns.

"Hard data in the U.S. on the whole suggest that the economy is in good shape, despite some slack in the labor market," said Yasuaki Amatatsu, currency analyst at Bank of Tokyo-Mitsubishi UFJ.

"Meanwhile, uncertainty over when the U.S. Federal Reserve will start raising rates, along with lingering concerns about geopolitical risks, are a drag on the dollar's further advance," he added.

Yunosuke Ikeda, head of FX strategy at Nomura Securities, said that while a speech at Jackson Hole, Wyo., by U.S. Fed chair Janet Yellen on Aug. 21 will be a key event for the market, participants haven't so far built up dollar positions by betting Ms. Yellen's remarks will favor the dollar.

This means the outcome is unlikely to disappoint traders or trigger a selloff in the pair, Mr. Ikeda said, adding there was a higher chance that the pair's gains would accelerate.

Since the Fed's scaling back of its asset purchases will end in October, its September policy meeting is considered more important than the Jackson Hole event as a place to look for clarification of the Fed's policy stance, he said.

Elsewhere in Asia, the dollar fell against the South Korean won after the Bank of Korea decided to cut its benchmark interest rate by 0.25 percentage point. The market move was seen as typical case of "buy the rumor and sell the news."

The rate cut had been mostly priced in since rumors started circulating in July, one trader said. The dollar was at KRW1,022.3 from Wednesday's close of KRW1,028.9.

The U.K. pound remained weak at $1.6680 against $1.6692 after falling overnight on a lackluster report on wage growth that raised the prospect of the central bank pushing back any interest-rate increase.

Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT

                         Latest     Previous   %Chg   Daily   Daily    %Chg
                                    2150 GMT          High    Low      12/31
USD/JPY Japan           102.57-60      102.40-43  +0.16   102.65   102.40  -2.59
EUR/USD Euro            1.3363-64      1.3363-67  -0.01   1.3370   1.3357  -2.77
GBP/USD U.K.            1.6678-82      1.6687-91  -0.05   1.6692   1.6672  +0.74
USD/CHF Switzerland     0.9074-78      0.9073-77  +0.02   0.9082   0.9074  +1.64
USD/CAD Canada          1.0915-20      1.0911-16  +0.04   1.0921   1.0912  +2.78
AUD/USD Australia       0.9295-98      0.9303-06  -0.08   0.9309   0.9288  +4.28
NZD/USD New Zealand     0.8466-70      0.8456-60  +0.12   0.8488   0.8456  +3.00

Euro Rate

EUR/JPY Japan           137.06-10      136.87-93  +0.13   137.11   136.86  -5.29
Source: ICAP PLC

Ewen Chew contributed to this article.

Write to Tatsuo Ito at tatsuo.ito@wsj.com


  (END) Dow Jones Newswires
  08-14-140145ET
  Copyright (c) 2014 Dow Jones & Company, Inc.


This article appears in: Forex and Currencies

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