LONDON: The dollar edged up against the yen in Asian trade Tuesday, driven by early afternoon selling of the Japanese currency that followed a smooth government bond auction.
The dollar USDJPY, +0.02% were at ¥118.52 from ¥118.44 late Monday in North America.
Earlier in the session, the greenback lost momentum against the yen, with stock market weakness prompting investors to pick up the Japanese currency as a safe haven asset, briefly sending the U.S. currency as low as ¥118.23. But the dollar later regained most of its earlier losses with investors covering their short positions. The Nikkei Stock Average NIK, -0.10% was down 0.1% in afternoon trading.
The dollar extended its gains later in the session, as the results of a 20-year JGB auction after the lunch break provided “a sense of safety” to broader market participants, said Mizuho Securities FX strategist Kenji Yoshii.
The Ministry of Finance announced that it sold ¥1.1 trillion in 1.2% 20-year bonds with a lowest price of ¥98.80 yielding 1.275%, significantly higher than street forecasts. The bid-to-cover ratio improved to 3.51 from 3.26 at the last tender.
But Yoshii said the dollar may find itself “vulnerable to selling pressure once it crosses the ¥119-threshold,” with looming fears about the Greek bailout talks.
