TOKYO, Nov 19: The dollar held firm on Monday as investors awaited economic data from Europe, with optimism for an early end to the war in Afghanistan continuing to support the US unit, dealers said.
The euro bought $0.8816-19 down from $0.8844 in New York and $0.8840-43 in Tokyo late Friday.
The greenback traded at 123.13-16 yen compared with 122.82 yen in New York and 122.21-24 yen in Tokyo late Friday.
Basically, we are waiting for more data, maybe the Ifo (German business sentiment index due out this week), and the focus will be the European economy, said Chase Manhattan Tokyo branch foreign exchange analyst Minori Takeuchi.
French gross domestic product figures are also due out on Friday.
However DBS Bank in Singapore said the euro might not see relief regardless of what data emerges.
There is little from the data front that could provide any lift, the bank said. With the market now pretty much occupied with developments in the US, the euro is likely to remain subdued this week.
Fuji Bank foreign exchange manager Hideyuki Tsukamoto said the dollar is being supported by the potentially early end to the war in Afghanistan.
To an extent, the war in Afghanistan looks as if it’s going to reach a conclusion faster than expected.
That, in addition to worries about Japan’s financial system, are helping to support the dollar, Tsukamoto said.
Traders were ready to test the dollar’s strength against the yen. People are quite conscious of the mid-123 yen level. If the dollar makes a clear breakthrough, it wouldn’t be odd in the least if the dollar moves to the mid-124 yen level, said Tsukamoto.
But optimism over Afghanistan could only offer limited support, said Chase Manhattan’s Takeuchi. The developments in Afghanistan are positive for the dollar but we need something new.
The market shrugged off news US industrial output fell a deeper-than-expected 1.1 per cent in October from the previous month, the 13th consecutive monthly decline in industrial output and the biggest monthly decline since Nov 1990, said dealers.
I think (the US output data) was discounted largely. It looks like investors are happy with relatively risky assets. People will ignore bad US numbers, Takeuchi said.
It’s reasonable for the dollar to rise further... but maybe around 123 yen is a good level for exporters because I don’t think Japanese see a much higher dollar/yen, she said.
Against the yen, the euro was quoted at 108.57 against 108.62 yen in New York and 108.03 in Tokyo Friday afternoon.
In late Singapore trade, the US dollar rose to 52.175 Philippine pesos from 51.91 on Friday, 44.465 Thai baht from 44.44, 1.8424 Singapore dollars from 1.8368, and 1,284.25 South Korean won from 1,284.00.
It was unchanged at 10,608 Indonesian rupiah and weakened to 34.4875 Taiwan dollars from 34.497.—AFP