LONDON: The dollar was weaker against the yen in Asian trade Friday, pulled down by profit-taking and selling by corporate investors related to end-of-the-month commercial trade settlement.
Around 0450 GMT, the dollar was down to Y117.97 compared with Y118.29 late Thursday in New York.
The greenback initially maintained overnight gains brought about by favorable employment numbers, in which Americans filed the fewest jobless claims since April 2000. But the U.S. currency then lost ground to fall as low as Y117.89 with profit taking kicking in. Selling by Japanese exporters for the purpose of regular settlement for commercial trade also exacerbated the decline.
Many market participants said the dollar will likely remain trapped in a tight range between Y117 and Y119 for a while, noting that uncertainties over risk aversion on tumbling oil prices is casting a shadow on U.S. corporate earnings and stocks.
U.S. stocks rose alongside oil prices Thursday but investors remain cautious.
“It is considerably important to see how the stock market will perform,” said Yasuaki Amatatsu, analyst of global markets research at Bank of Tokyo-Mitsubishi UFJ.
“We can’t see what level the stock market will stabilize at unless we watch earnings.” The dollar is now facing difficulty testing Y120, as the VIX fear gauge increases due to uncertainties over U.S. earnings and stocks.
Investors are shifting their focus to U.S. gross domestic product figures for the October-December period slated later Friday, but some contend the dollar won’t likely go up much only based on that piece of macroeconomic data.
It may be difficult for the dollar to challenge the Y119 level if potentially downbeat U.S. corporate earnings later Friday cancel out an expected solid reading for the U.S. GDP data, said IG Securities market analyst Junichi Ishikawa.
