TOKYO, Nov 1: The dollar eased against the yen Thursday on Japanese exporter selling but stayed firm after the release of better-than-expected economic data from the United States, dealers said.
The greenback traded at 122.28-30 yen against 122.41 yen in New York and 121.82-85 yen in Tokyo late Wednesday.
The world’s number one economy shrank at a 0.4 per cent annual rate in the third quarter, Washington said Wednesday, marking the first decline since the first quarter of 1993 and the largest drop since the first quarter of 1991, when the US was last in recession but the dip was milder than anticipated.
Separately, the Chicago Purchasing Management Association said its business barometer eased to 46.2 points from 46.6 in September a negative sign given that a reading below 50 points indicates a decline in economic activity.
The GDP (gross domestic product) figure was better than expected, and also, the Chicago PMI figure was also better than expected so dollar sentiment is now a little bit bullish, still in the Tokyo market, said Mitsuru Sahara, vice president of the foreign exchange division at Sanwa Bank.
But Japanese exporters have an interest to sell the dollar at the 122.50-70 level so at the moment the dollar/yen sticks to the 122.20-50 range.
Commerzbank’s head of foreign exchange Ryohei Muramatsu said the market desperate to see a recovery in the US will take any news, good or bad, as positive for the dollar.
Stronger-than-expected indicators have helped the greenback, while weaker numbers are viewed as a reason to expect more easing by the US Federal Reserve.
The GDP figures compared with the market expectation of minus 1.0 per cent but minus is minus. It’s quite sure the US economy is in recession, Muramatsu said, adding he already expects a further 50-point cut by the Fed.
The market is partly being driven by interest from Japanese investors in buying dollar assets, as well as the continued trend of buying dollars that were sold off in the aftermath of the September 11 terror attacks, Muramatsu said.
Investors still view suspiciously the activities of the European Central Bank, while Japanese politics and the nation’s unstable financial markets provide few reasons to buy the yen, Muramatsu said.
Traders are now looking ahead to the National Association of Purchasing Managers index on Thursday and US labour market data Friday.
Euro trade was thin with many European markets shut Thursday for a public holiday, dealers said.
The euro bought $0.9017-20 compared with $0.8999 in New York and $0.9052-55 in Tokyo late Wednesday.
A dealer at BNP Paribas in Singapore said trade in the euro was expected to be sluggish. It’s virtually dead, moving in a range of just a few pips, he said. Today most of Europe is on holiday, so I expect the euro will stay there for the moment.
Against the yen, the euro was quoted at 110.29 against 110.16 in New York and 110.36 in Tokyo Wednesday afternoon.
In late Singapore trade, the dollar rose to 44.7400 Thai baht from 44.67 the previous day, 10,545 Indonesian rupiah from 10,455, 1.8274 Singapore dollars from 1.8183 and 1,298.05 South Korean won from 1,296.15.
The greenback was even at 34.5265 Taiwan dollars and 51.965 Philippine pesos.—AFP