Dollar Weakens, Extends Losses Against Yen
The dollar declined broadly on Wednesday, with the yen notably making fresh headway against the greenback after reports that the country’s economics minister will attend the next meeting at the Bank of Japan.
The ICE dollar index which measures the greenback against a basket of six rival currencies, reached 79.691, from 79.721 in late North American trading on Tuesday.
“Once the U.S. fiscal negotiations are resolved, we expect that the U.S. dollar will strengthen against developed market peers on better growth and higher interest rate differentials. But until [then], we expect the U.S. dollar to remain under some pressure,” said strategists at Credit Agricole.
“Data in the U.S. today will paint a picture of continued modest recovery, with positive industrial production figures, and modest inflation,” they said.
The WSJ Dollar Index , which measures the currency against a wider basket, declined 0.1% to 70.56.
Against the Japanese yen , the dollar fell to ¥88.10, from ¥88.92 in late Tuesday.
The yen climbed on Tuesday after remarks by Japanese Economy Minister Akira Amari, who said that an overly weak yen wasn’t good for Japan’s economy, according to Dow Jones Newswires.
Wednesday’s “new round of short covering” coincided with reports that Amari would attend the next Bank of Japan policy meeting, said Sue Trinh, strategist at RBC Capital Markets.
“In and of itself, the attendance of the Economics Minister at a BoJ meeting is not unusual, but given Amari’s recent warning about yen weakness, expectations of aggressive Bank of Japan easing were pared back a touch,” said Trinh said.
The yen has dropped since last October, when investors began to factor in the likely impact of a change of government on monetary policy, expecting a new government to lean on the central bank to do more to ease deflation.
The euro slipped to $1.3286, from $1.3313 late the previous session ahead of euro area inflation data. The British pound traded at $1.6057, from $1.6068.
The Australian dollar reached $1.0550 compared to $1.0560 Tuesday, ahead of key employment data due out Thursday.
Marketwatch
