Dollar slips in Asian trade after US rally


TOKYO: The dollar lost ground in early Asian trade on Wednesday after flying on fresh data that showed US consumer confidence and home prices were on the rise.

The figures are the latest evidence that the world’s biggest economy could be mounting a recovery, paving the way for the US Federal Reserve to roll back its huge bond-buying programme known as quantitative easing.

Dollar trade has been influenced by differing views over comments from Fed chairman Ben Bernanke last week, although dealers generally viewed the central bank chief as saying the Fed needed to see a few months’ more data before it would tighten policy.

In Tokyo morning trade, the dollar bought 102.14 yen, slipping from 102.32 yen in New York late Tuesday.

“The dollar is becoming the main driver of the (dollar/yen) pair and focus will increasingly be on the Fed’s stance toward its bond buying and indicators like US jobs data,” Kengo Suzuki, forex strategist at Mizuho Securities, told Dow Jones Newswires.

The greenback jumped Tuesday following the release of the S&P/Case-Shiller report on March US housing prices, showing they were up 10.9 percent in over March 2012, the largest year-on-year increase since April 2006.

The Conference Board’s US consumer conference index for May took a strong jump to its best level in five years, also helping to propel the dollar.

The greenback rose past 103 yen this month to hit its highest level since October 2008 on the Bank of Japan’s aggressive monetary easing and robust US economic data. Easing tends to push down a national currency.

“We expect the yen to remain a sell against the dollar,” Credit Agricole said in a note.

“Diverging Fed-BoJ monetary policy expectations combined with once again stabilising risk sentiment should make a case for the pair to trend back to this year’s high and above.”

The euro, meanwhile, was mixed at $1.2859 and 131.34 yen, from $1.2855 and 131.61 yen in US trade.

New German inflation data was not likely to offer any surprises with the eurozone’s dim growth prospects set to keep prices contained, Credit Agricole said.

“Accordingly the (European Central Bank) will continue to keep all options regarding additional policy action open.”


Please follow our commenting guidelines.

Comments are closed.