Dollar Edges Higher, As Yen Dives Deeper

The U.S. dollar regained some lost ground Monday ahead of a week of key events for the currency, while the Japanese yen fell further amid a pushback from Tokyo over forex-related criticism.

By midday in East Asia, the ICE dollar index , which tracks the U.S. unit against six major rivals, sat at 79.832, up from late Friday’s 79.762.

The WSJ Dollar Index , which measures the greenback against a slightly larger basket of currencies, edged up to 71.05 from 71.00 late Friday.

Looking ahead for the dollar, Crédit Agricole chief global forex strategist Mitul Kotecha said that “a heavy slate of U.S. data releases this week will keep markets busy, but overall we see little to dent the positive tone to risk assets over coming sessions.”

The U.S. currency sometimes falls in value as appetite for risk improves, with investors selling out of the safe-haven greenback for currencies that carry better yields.

While Kotecha didn’t call a direction for the dollar, he tipped Wednesday’s fourth-quarter economic growth data, a Federal Reserve policy decision also due for Wednesday, and Friday’s monthly jobs report as the top items on the U.S. agenda.

Meanwhile, the yen traded lower Monday, with the dollar  hitting ¥91.26, its highest mark since June 2010, before pulling back later in the day to trade at ¥91.04, still above late Friday’s ¥90.94.

The euro  also rose against its Japanese rival to buy ¥122.45, up modestly from ¥122.36 at the end of last week.

The yen’s latest in a string of losses came as Japanese Finance Minister Taro Aso rebutted foreign criticism that Tokyo was manipulating its currency lower to benefit Japan’s exporters.

Aso said the yen’s fall in recent months was merely a side effect of his country’s fight against the deflation that has long plagued the Japanese economy, according to reports from the region.

“We didn’t say anything when the dollar and the euro were being pushed lower. It is unreasonable to complain just because [the dollar] rose back by a mere 10 or 20 yen,” Aso said, according to a Dow Jones Newswires translation of his remarks.

The finance minister’s comments came amid growing talk of international tensions over what some see as competitive currency devaluations among the major economies.

“The issue of ‘currency war’ is once again doing the rounds in the wake of Japan’s more aggressive stance on the [yen], leading to growing friction in currency markets,” Crédit Agricole’s Kotecha said.

Also Monday, Kyodo News reported Japanese Prime Minister Shinzo Abe and U.S. President Barack Obama were close to finalizing plans for a summit on Feb. 21 or 22. The report didn’t mention the yen as a possible agenda item, however.

Among other major currency pairs, the euro  changed hands for $1.3452, little moved from Friday’s $1.3454.

The European currency had struck an 11-month high of $1.3480 at the end of last week as banks prepared to repay a larger-than-expected amount of special loans provided by the European Central Bank.

Also Monday, the British pound  moved lower to $1.5761, from Friday’s $1.5804, while the Australian dollar  sat unchanged at $1.0421.

Marketwatch