The U.S dollar mixed against major currencies this week as economic perspective still remained unclear and the Japanese government massively sold yen in forex market on Wednesday. The dollar versus yen went through a bumping road this week amid mixed economic data and Japan's surprising market intervention. On Monday the dollar tumbled against most major currencies in New York trading as data released by National Bureau of Statistic of China on last Saturday showed factory production expanded in August, raising optimism in market. However, the rapid growth of China's CPI stirred up some concern about measures would be taken by the Chinese government to ease the pressure on price. The banks have to comply with stricter capital requirements according to new banking rules passed by regulators on last Sunday. New Basel rules require banks to hold top-quality capital totaling seven percent of their risk-bearing assets, which are up from two percent under current rules. The longer-than-expected time for banks to adapt shifted the market's attention to more short-term market-affecting factors. The euro rose to 1.2867 dollars on Monday from 1.2718 dollars on previous trading day. The dollar hit a new 15-year low against yen on Tuesday after better-than-expected U.S. retail data and Japanese Prime Minister won the ruling party leadership vote. The market betted on no immediate action taken by the Japanese government to stem the yen's rise. But the Japanese government intervened the forex market unexpectedly on Wednesday for the first time in six years to sell estimated two trillion yen, worth of 23 billion U.S. dollars. The rising of yen against the dollar was snapped and the dollar against yen rebounded quickly from below 83 to 85.62 in late trading on Wednesday. In early trading on Thursday, the dollar against yen still kept above 85 and rose later as Japan's Prime Minister Naoto Kan reiterated that Japan would take decisive steps on yen strength, while Bank of Japan Governor Masaaki Shirakawa said he expected intervention would stabilize the forex market. The euro also rose against the greenback as strong demand at a Spanish bond auction raised confidence in Europe. U.S. Consumer sentiment released on Friday unexpectedly worsened in early September. The figure was at 66.6, down from 68. 9 in August, its weakest level in more than a year. The euro slipped against the dollar in early trading as a report showed that Ireland may need outside help to address its financial-sector and economic problems. But the euro later rallied and gained against the dollar on the same day after an Irish Finance Ministry spokesman said that Ireland did not need external assistance. The euro fell back slightly below 1.31 against the dollar in later trading. The dollar against the yen remained steady around 85.50 on Friday as concern about the Japanese government's further intervention still lingered in the market. For the whole week, the dollar index lost 0.5 percent. Versus the yen, the U.S. dollar was up nearly three percent. The dollar kept unchanged against the Swiss franc this week, while the euro advanced 1.3 percent against the dollar. The British pound climbed 1.3 percent this week against the greenback.

Source