TOKYO, Oct 26: The dollar rose against the yen on Friday following an overnight rally on Wall Street while grim economic data from Japan scuppered yen-buying sentiment, traders said.
The greenback traded at 123.15-17 yen in Tokyo against 122.91 yen in New York and 123.09-11 yen in Tokyo late Thursday.
Yesterday after the durable goods data came out from the US, I think the dollar was sold off, but stocks rallied and traders suddenly became averse to taking short positions on the dollar, said Barclays Bank foreign exchange manager Hiroshi Sakuma.
For the dollar to be bought beyond this level, I think we need a little bit more market moving news, he said. If we have that, I think the dollar could suddenly rise to 125 or 126 yen.
Orders for big-ticket items such as washing machines or planes plunged 8.5 per cent in September from a month earlier, the US government said Thursday, as the terrorist attacks hit the economy.
Market players have returned their focus to economic fundamentals, Sakuma said, adding, The market has become used to talk about terrorism.
Everyone knows the economy is doing badly. So even if more bad news came out today, I don’t think people would suddenly sell the yen, he said.
He predicted a slight dollar selloff before the release on Friday in the US of the University of Michigan Consumer Sentiment Survey, which he expected to be negative.
However, Commerzbank foreign exchange manager Ryohei Muramatsu said the market continues largely to ignore negative indicators on the US economy, prefering to focus on the negative prospects for Japan and Europe.
There remains a question mark, he said, though conceding that the US monetary response has been more brisk than Europe or Japan.
The euro remained weak after a decision by the European Central Bank Thursday not to lower interest rates, which disappointed the market.
The European unit bought $0.8934 compared with $0.8932 in New York and $0.8911-13 in Tokyo late Thursday.
Against the yen, the euro was quoted at 109.94, against 109.78 in New York and 109.71 in Tokyo Thursday afternoon.
However, Muramatsu said the central bank is almost certain to lower rates at its next meeting in line with a policy gathering by the US Federal Reserve.
There is a Fed meeting on November 6 and the next ECB meeting is on November 8. It was better and quite reasonable to wait, he said. —AFP
