TOKYO: The dollar dipped to its lowly level versus the yen in a month on Tuesday, as Treasury yields tumbled on enlarged insists for safe-haven property against a background of sinking oil value.
The dollar fell about 0.5 percent against the yen to 117.83 , as markets in Tokyo reopened after Monday’s public holiday. It earlier touched 117.74 yen, its lowest level since Dec. 17.
“Lower oil prices should be good for the U.S. economy, but I think people worry about disinflation, even in the U.S., so the market may be worried that lower inflation will postpone the Federal Reserve’s hiking plans,” said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.
“I think the U.S. dollar will recover, but it could take some time,” he added.
While Asian stocks were mostly firmer after upbeat Chinese trade data helped offset risk aversion generated by the continuing slide in crude oil prices, Japan’s Nikkei underperformed and shed 1.7 percent as investors returned after the three-day weekend.
With Treasury yields and stocks falling, Kathy Lien, managing director at BK Asset Management in New York, believes the dollar could see a deeper near-term pullback towards the 116.75 to 117.50 range, before eventually making a run back to a 7-1/2 year peak of 121.86 struck late in December on the EBS trading platform.
The yield on benchmark 10-year Treasury notes wallowed at 1.907 percent in Asian trading, down from its U.S. close of 1.912 percent on Monday.
The U.S. 30-year bond yield fell to a near-record low overnight, while the five-year Japanese yield dropped to zero for the first time.
Japanese Economics Minister Akira Amari said on Tuesday that government forecasts for next fiscal year starting from April show it will be difficult to meet the Bank of Japan’s 2 percent inflation target due to falling oil prices.
Tokyo markets digested weekend news that Japan’s government will propose a record budget for next fiscal year of more than $800 billion but cut borrowing for a third year, as Prime Minister Shinzo Abe seeks to maintain growth while curbing the heaviest debt burden in the industrial world.
The euro got a leg up on the dollar, edging about 0.2 percent higher on the day to $1.1853. But the European unit remained not far above a nine-year nadir of $1.1754 touched last Thursday, with the European Central Bank on the verge of printing money outright to shore up the eurozone economy.
European stock markets slide at open 25 june 2018
London:Europe's main stock markets dropped 0.7 percent in opening deals on Monday, as investors worried over the festering global trade...
