Dollar Posts Small Gain Vs. Yen After Selloff

The U.S. dollar made a minor rise against the Japanese yen Wednesday, following the previous day’s rally for the Japanese currency after the Bank of Japan didn’t expand stimulus measures.

The dollar  traded at ¥96.33, up from ¥96.22 late Tuesday in North America.

The buck was battered Tuesday, falling about 3% against the yen “following the Bank of Japan’s decision to hold its key policies in place while refusing to address recent volatility in bond and equity markets,” DailyFX currency analyst Christopher Vecchio told clients Tuesday.

There were market players that also wanted Japan’s central bank to extend the duration on its ultra-low-interest loans to banks. The yen’s surge got additional support from the Bank of Japan’s modestly more upbeat view on the economy, which has been battling deflation for years.

The dollar climbed above the ¥103 level in mid-May as the yen struggled on the back of the Bank of Japan’s April announcement that it would pump some $1.4 trillion into the economy to revive growth and push inflation up to a 2% target in the next two years.

Though off recent highs, the dollar is still up about 12% against the yen this year.

The Australian dollar  on Wednesday saw a small pickup against the U.S. dollar, trading at 94.54 U.S. cents compared with 94.46 U.S. cents on Tuesday. It had dropped to about 93.35 U.S. cents on Tuesday, marking its lowest level since mid-September 2010, according to FactSet data.

The Aussie has been “tormented in recent weeks by continuing downward revisions of Chinese growth, a resurgent U.S. dollar and a string of average domestic economics pointing to further [Reserve Bank of Australia] rate cuts,” CMC Markets premium-client manager Niall King said late Tuesday.

On Thursday, investors are due to get May figures on Australian employment, with economists expecting the economy to have lost 10,000 jobs last month, with the jobless rate moving up to 5.6% from 5.5%. In April, more than 50,000 new jobs were created.

The data “could prove a critical checkpoint for the Australian economy and its ailing currency,” said King. “Any sign of weakness here is bound to weigh heavily on the local dollar, while on the flip side, equity markets may cheer in the ensuing likelihood of further easing measures locally.”

The euro gained against the dollar  , buying $1.3312 from $1.3305 Tuesday, and the British pound   rose to $1.5646 from $1.5634.

On Tuesday, Germany’s constitutional court began hearing debate on whether the European Central Bank’s Outright Monetary Transactions — a yet-to-be-used program to buy bonds from struggling euro-bloc nations — is allowable under German law. A ruling isn’t expected until later this year, however.

The ICE dollar index , which tracks the greenback against six rivals — was little changed at 81.121. The WSJ Dollar Index , which uses a slightly wider comparison basket, rose to 73.06 from 73.04.

Source : Marketwatch

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