Dollar, euro hold steady in Asia

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TOKYO: The dollar and euro dipped against the yen in Asia Tuesday after enjoying a pick-up in New York on upbeat manufacturing data in the United States and Europe.

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Strength in the world’s biggest economy is a key factor behind the timeline for the US Federal Reserve to wind down its massive stimulus drive, a move that would likely push the dollar higher.

In morning Tokyo trade, the greenback fetched 99.57 yen compared with 99.66 yen in New York where it had jumped to near the 100-yen mark following a better-than-expected report on manufacturing activity.

The euro was slightly weaker at $1.3054 from $1.3061 and 129.97 yen from 130.17 yen in New York.

The Institute for Supply Management’s purchasing managers index moved back into positive territory in June, raising hopes the world’s top economy is solidifying its recovery.

Investors are keeping a close eye on US data amid mixed signals from Fed officials about the timing for wrapping up its $85-billion-a-month bond-buying programme, known as quantitative easing.

Fed chief Ben Bernanke last month said the bank may start winding down the scheme later this year, but other senior officials afterwards pointed to a longer timeframe as global markets were sent into a tailspin.

The dollar is expected to benefit when the Fed eventually begins to reel in the programme, which it says will happen when the economy is able to stand on its own feet.

The European single currency also got a lift after the Markit Eurozone Composite Purchasing Managers Index rose to a 16-month high in June.

The upbeat news reduced the likelihood of more monetary easing measures by European Central Bank (ECB) when it holds a policy meeting this week.

“The euro has been supported by better-than-expected manufacturing… data,” Credit Agricole said.

“As such the most recent data supports the notion that the ECB will refrain from additional policy action as soon as this week.”

Also Monday, the Bank of Japan’s quarterly Tankan survey showed business confidence among the nation’s manufacturers soared on the back of a government drive to kickstart economic growth.

However, Japan is still mired in deflation and inflation expectations remain low.

“From that angle there is little scope for the BoJ to become less dovish anytime soon,” Credit Agricole said.

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