Yen falls against dollar, euro as Nikkei recovers
The yen weakened against the dollar and the euro in Asian trade Thursday, as a recovery in Tokyo stocks prompted selling of the safe-haven Japanese currency.
The dollar USDJPY, +0.34% was at ¥117.74 compared with ¥117.27 late Wednesday in New York and a low of ¥116.07 overnight. The euro EURJPY, +0.22% was at ¥138.59 from ¥138.25.
The benchmark Nikkei index NIK, +1.86% rose 1.9%, after shedding more than 400 points in the previous two sessions. The improvement in risk-taking sentiment prompted selling of the yen.
In keeping with the stock market’s steady gains Thursday, “the dollar-yen pair is taking corresponding steps,” said Kyosue Suzuki, head of the FX and money market sales department at Societe Generale.
“It may be difficult for the dollar to find a clear direction,” until fresh cues emerge, said Osao Iizuka, head of FX trading at Sumitomo Mitsui Trust Bank.
Rather than dollar-yen trading, many investors are increasingly looking at the euro ahead of a policy setting meeting by the European Central Bank scheduled for Jan. 22.
Societe Generale’s Suzuki said investors are becoming more certain that the ECB is leaning toward a bond-purchasing program, making the euro more vulnerable to selling pressure.
The euro EURUSD, -0.12% was at $1.1776 from $1.1789.
“The euro may try to break below $1.170 and we may have to consider a downside bias to $1.165,” said Suzuki. “I can expect investors will be trying to find attractive trading opportunities (for dip buying) as the euro tests its downside,” up to the beginning of next week.
In an interview with Germany’s Die Zeit newspaper published Wednesday, ECB head Mario Draghi said the bank didn’t have many options left to expand its monetary policy, an indication that officials are moving toward the launch of purchases of government bonds issued by eurozone countries.
Investors showed a muted reaction to Bank of Japan Gov. Haruhiko Kuroda’s remarks earlier in the day that a falloff in demand after an increase in the sales tax in April was diminishing, an indication that the economy may be getting over the sluggishness that pushed it into recession.
The WSJ Dollar Index BUXX, +0.06% a measure of the dollar against a basket of major currencies, was down 0.03% at 83.82.
Source: MarketWatch – Yen falls against dollar, euro as Nikkei recovers
