Dollar Hits 2-Week High Against Yen After Fed's Hawkish Signals
August 29 2016 - 1:49AM
Dow Jones News
By Hiroyuki Kachi
The dollar hit a two-week high against the yen during Asia trade
on Monday, after top officials of the U.S. Federal Reserve sent
hawkish signals indicating a stronger case for raising short-term
rates in the coming weeks or months.
The greenback advanced to Y102.28 in early afternoon, its
highest level since Aug. 12, before giving up its earlier gains to
change hands at Y102.24 at 0450 GMT. That was higher than Y101.82
late Friday in New York.
The euro was almost unchanged at $1.1204 midday from $1.1200
late Friday.
The WSJ Dollar Index, a measure of the dollar against a basket
of major currencies, was up 0.06% at 86.54.
After strengthening to just below Y102.00 on Friday following
hawkish remarks of the Fed officials, the dollar kept its upside
momentum against the Japanese currency during Asia trade. Gains in
Tokyo stocks helped to brighten sentiment, causing investors to
sell the perceived safety of the Japanese currency. The Nikkei
Stock Average rose 2.3% midday, marking its gains after a two-day
losing streak.
Fed Chairwoman Janet Yellen said in remarks delivered in Jackson
Hole, Wyo., on Friday, that she believes "the case for an increase
in the federal-funds rate has strengthened in recent months."
Separately, Fed Vice Chairman Stanley Fischer signaled in an
interview that the Fed could raise interest rates as soon as next
month.
Investors took the monetary policy differentials in the U.S. and
Japan as cues to buy the dollar against the yen. Bank of Japan Gov.
Haruhiko Kuroda said Saturday at the Fed's symposium that the
central bank will take additional monetary easing measures "without
hesitation" to achieve its inflation target.
"I don't think the dollar will go up rapidly," said Minori
Uchida, head of Tokyo global markets research at Bank of
Tokyo-Mitsubishi UFJ. "By any chance, there may be a rate increase
in September. But it still remains uncertain where it goes from
there."
"I think a weaker dollar and a higher yen will likely remain
pervasive," said Mr. Uchida, adding that a moderate pace of rate
increases won't make the dollar stronger than its peers due to the
U.S. trade imbalance.
The dollar may get support against the yen on a vague sense of
hope for U.S.-Japan monetary policy gaps in the run-up to the
monetary policy meetings in the U.S. and Japan in September. "But
that won't likely be the main mover," said Mr. Uchida.
The dollar could touch as high as Y105. But once investors find
it difficult for the dollar to gain further, the U.S. currency may
turn downward, he said.
In other currency trade, the euro was at Y114.56 from
Y113.98.
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT
Latest Previous %Chg Daily Daily %Chg
Dollar Rates Close High Low 12/31
USD/JPY Japan 102.24-25 101.82-83 +0.41 102.28 101.83 -15.01
EUR/USD Euro 1.1203-06 1.1195-98 +0.07 1.1209 1.1189 +3.17
GBP/USD U.K. 1.3121-23 1.3135-37 -0.11 1.3136 1.3111 -10.95
USD/CHF Switzerland 0.9770-74 0.9780-84 -0.10 0.9787 0.9768 -2.48
USD/CAD Canada 1.3001-06 1.3001-06 0.00 1.3026 1.3000 -6.03
AUD/USD Australia 0.7550-54 0.7561-65 -0.15 0.7563 0.7525 +3.64
NZD/USD New Zealand 0.7235-41 0.7235-41 0.00 0.7240 0.7210 +5.93
Euro Rate
EUR/JPY Japan 114.54-58 114.00-04 +0.47 114.58 114.01 -12.41
Source: Tullett Prebon
Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com
(END) Dow Jones Newswires
August 29, 2016 01:34 ET (05:34 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.