MW: Dollar rises to trade near post-quake high vs. yen
Australian dollar sets another fresh high versus greenback
By William L. Watts and Lisa Twaronite, MarketWatch
LONDON (MarketWatch) — The U.S. dollar gained ground versus most major rivals Wednesday, pressing to a post-earthquake high versus the Japanese yen after another Federal Reserve official spoke out against a further round of quantitative easing by the U.S. central bank.
The dollar (USDYEN 83.1100, +0.6400, +0.7760%) rose to 83.10 yen, up from ¥82.45 late Tuesday. The euro (EURYEN 117.1500, +0.8100, +0.6962%) gained 0.6% to trade at ¥117.04.
The dollar index (DXY 76.22, -0.03, -0.04%) , which measures the U.S. unit against a basket of major rivals, rose to 76.320 from 76.247 late Tuesday.
The dollar’s overall rise was attributed in large part to remarks by Dallas Fed President Richard Fisher, who said late Tuesday that he would vote against any further monetary easing by the central bank at the end of the current program in June.
“I will vote against ... any further extension of that program,” Fisher told Fox Business News, referring to the U.S. Federal Reserve’s $600 billion asset-purchase program. “I cannot foresee a circumstance where I can support any further liquidity in the economy,” he said. See report on Fisher’s comments.
The dollar on Tuesday breached the high of ¥81.99 established in the wake of coordinated intervention to weaken the Japanese currency undertaken by the Group of Seven nations on March 18. The Wednesday gain leaves dollar/yen just below the ¥83.30 high scored in the immediate aftermath of the March 11 earthquake.
“The huge liquidity add by the BOJ [Bank of Japan] in the aftermath of the crisis is likely to place downward pressure on the yen,” said Jane Foley, senior currency strategist at Forex.com.
“Also, expectations that growth will suffer from production disruptions caused by both the natural disaster and the nuclear threat are yen-negative. These fundamentals are encapsulated in interest rate differentials which highlight the risk of a softer yen,” she said.
The euro (EURUSD 1.4097, -0.0014, -0.0992%) traded at $1.4089, down from $1.4092 late Tuesday. See real-time currency quotes and tools.
The British pound (GBPUSD 1.6043, +0.0038, +0.2374%) bought $1.6049, compared with $1.5995 late Tuesday.
The Australian dollar seized the Asian trading spotlight again Wednesday, rising to a fresh high against its U.S. counterpart even as the latter firmed against other rivals.
The Aussie (AUDUSD 1.0311, +0.0023, +0.2236%) rose to its highest level against the greenback since it was allowed to float freely in 1983, touching $1.0331. In midday European trade, the Aussie fetched $1.0318, up from $1.0290 in late North American trading on Tuesday.
“As concerns over geopolitical problems in Japan and Libya begin to ease and risk sentiment improves, currency investors have once again become interested in the Aussie’s G-7 leading 4.5% yield,” said Boris Schlossberg, director of currency research at GFT.
This week’s 200 point rally in dollar/yen has refocused attention on the Australian dollar-Japanese yen cross, lifting the Aussie versus the greenback in the process, he said, noting that interest-rate expectations have also increased, with the market now anticipating further rate hikes from the Reserve Bank of Australia by the end of 2011.
The Australian dollar traded at ¥85.74, up 1% from Tuesday after hitting its highest level versus the Japanese yen since early May.
