Dollar Slightly Down Against Yen After Hitting One-Month Low

The dollar fell slightly against the yen in Asian trade Tuesday, with dip-buying kicking in to lift the greenback off a one-month low.

The dollar USDJPY, -0.05% was down slightly to ¥118.24 compared with ¥118.35 late Monday in New York. With the benchmark Nikkei Stock Average NIK, -0.64% falling as much as 2.1% earlier in the session amid sliding oil prices, the dollar started extending its downside against the yen, perceived as a safe haven in times of financial instability.

The greenback’s fall to just below the ¥118 mark triggered options-related stock-loss selling orders that earlier gave the U.S. currency an extra shove to as low as ¥117.74, its lowest since Dec. 17.

But the downside was supported with bids related to dip buying that helped the dollar recover to above ¥118 later in the session. The Nikkei was up 1.5% midday, erasing some earlier losses.

In addition to stock-market weakness on soft oil prices, the yen’s strength against rivals other than the dollar was cited as a reason for pressure on the dollar-yen. The yen strengthened against the euro EURJPY, -0.13% which was briefly at ¥139.45, its lowest since Oct. 31. The euro later recovered to ¥139.98 from ¥141.06 in New York.

“I think the investor focus is gradually shifting toward Europe” ahead of the European Central Bank’s closely monitored policy-setting meeting scheduled for Jan. 22, said Toshihiko Sakai, senior manager of forex and financial products trading division a Mitsubishi UFJ Trust and Banking.

Sakai said he had the impression the dollar is losing against the yen without any particular momentum. Instead, he thinks the pair will likely move in tandem with the yen’s strength against the euro and other rival currencies, adding that the common currency is likely to fall below ¥138 by the end of the month.

Among other currency pairs, the euro EURUSD, -0.08% was almost unchanged at $1.1839 from $1.1837.

The WSJ Dollar Index BUXX, +0.11% a measure of the dollar against a basket of major currencies, was up 0.06% to 83.95.

Source : Reuters