By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch) — The dollar gave back some of its invention-triggered gains against the yen Thursday, although it remained in a narrow range as investors stayed on high alert for more direct currency action by Japanese authorities.
Japan sold an estimated ¥2 trillion ($23 billion) of its own currency Wednesday, in what would be a record for a single day, according to media reports, after the yen rose to a 15-year high against the dollar.
The exact amount of the intervention will be revealed at the beginning of next month, when Japan’s Ministry of Finance releases its monthly foreign reserves data.
The dollar (USDYEN 85.3300, -0.3900, -0.4549%) was buying ¥85.35, down from ¥85.66 in late North American trading Wednesday.
While Japan’s recent market moves were in the spotlight, analysts said fundamental factors will continue to pressure the greenback.
“We think the direction of USD/JPY [U.S. dollar/Japanese yen] is ultimately dependent on U.S. yields, which remain under downward pressure and are continuing to weigh on USD/JPY,” said David Forrester and Yuki Sakasai at Barclays Capital in a note to clients Thursday.
Investors awaited U.S. Treasury Secretary Timothy Geithner testimony on Capitol Hill late Thursday at a Congressional hearing on China’s currency policy. His prepared remarks indicated he will call on China to allow its currency to appreciate further. Read more on what Geithner will say about China’s currency policy.
China’s yuan hit another high against the dollar despite the U.S. unit’s gains, suggesting that Beijing is making efforts to be accommodative. The country’s central bank set the mid-point for the yuan’s daily trading range at 6.7181 Thursday, compared to 6.7250 on Wednesday. The level marks the fifth day in a row that the daily reference rate has been set a fresh record low against the dollar. Read about the yuan’s record against the dollar.
The dollar index (DXY 81.55, +0.06, +0.07%) which tracks the performance of the U.S. unit against a basket of six major currencies, rose to 81.551 from 81.429 late Wednesday.
The euro (EURUSD 1.2985, -0.0027, -0.2075%) recently traded at $1.2988, down from $1.3020 late Wednesday.
The British pound (GBPUSD 1.5587, -0.0039, -0.2496%) traded at $1.5590, up from $1.5529.
The dollar shot up 3% against the yen Wednesday, the biggest gain since 1995, after Japanese authorities’ action. Read Wednesday’s currencies report for more on Japan’s yen intervention.
