TOKYO: The US dollar Wednesday steadied in the lower 119 yen range in Tokyo, at one point hitting a seven-year, four-month high on the back of solid US economic data and higher U.S. Treasury yields.
At 5 p.m., the dollar fetched 119.22-23 yen compared with 119.16-26 yen in New York and 118.81-82 yen in Tokyo at 5 p.m. Tuesday. It moved between 119.13 yen and 119.44 yen during the day, changing hands most frequently at 119.34 yen.
The euro was quoted at $1.2373-2374 and 147.52-56 yen against $1.2378-2388 and 147.53-63 yen in New York and $1.2453-2454 and 147.96-148.00 yen in Tokyo late Tuesday afternoon. The dollar rose to its highest point since August 2007 in the morning, after strengthening in New York trading on the back of better-than-expected U.S. October construction spending and strong new car sales data for November.
“Some positive economic indicators and hawkish comments from U.S. Federal Reserve Vice Chairman Stanley Fischer triggered dollar buying,” said Daisuke Karakama, chief market economist at Mizuho Bank, adding that such factors led to a rise in U.S. Treasury yields, making the U.S. currency attractive. Fischer signaled Tuesday that the U.S. central bank is getting closer to dropping its vow to keep interest rates low for a “considerable time.”
But the dollar edged down later in the day as some market players adjusted positions ahead of the European Central Bank’s policy meeting on Thursday and U.S. jobs data due out Friday, dealers said. “Players who have done a lot of dollar buying could be wary of maintaining such positions ahead of the jobs data release,” said Toru Moritani, chief market economist at Sumitomo Mitsui Banking Corp.
Karakama, meanwhile, said traders could be hesitant about pushing the dollar above the 120 yen line at the moment, given the rapid rise seen in the U.S. currency “without any adjustment” over the past month. The dollar has jumped about 10 yen since the Bank of Japan surprised financial markets on Oct. 31 by expanding its aggressive monetary easing, in sharp contrast with the U.S. Federal Reserve that has wrapped up its massive asset purchase program and is moving closer to raising rates. The euro traded without clear direction mostly in the upper 147 yen range in Tokyo ahead of the ECB meeting.
