WSJ:WORLD FOREX: Dollar Firms Vs Yen But May Come Under Pressure
TOKYO (Dow Jones)--The dollar was slightly firmer against the yen in Asian trade Monday, but the greenback and the euro will likely be pressured lower this week as global slowdown concerns and Greek debt problems encourage investors to park funds in safe-haven yen.
The dollar got a brief lift in early trade as importer purchases and stop-loss buying by short-term speculators kicked in. But the greenback soon lost momentum as a risk-averse mood prevailed amid falls in Asian share prices following losses in the U.S. stock market Friday.
"Upward pressure on the yen to avoid risks is likely to flare up since the Nikkei and other Asian share prices are on a declining trend," said Hideki Hayashi, global economist at Mizuho Securities.
At 0450 GMT, the dollar was at Y80.55 from Y80.34 late New York Friday, according to EBS via CQG. The euro was at $1.4342 from $1.4350, while the euro was at Y115.53 from Y115.23.
"The dollar/yen is likely to test again the downside to the Y79 level this week, driven by yen-buying in crosses amid weak stock markets around the globe," said Yoshio Yoshida, a trader at Mizuho Trust and Banking.
Yoshida said the focus is on whether the Australian dollar, a unit favored by Japanese retail investors, falls through support at Y84.50 to gauge the momentum of yen-buying. The market in Sydney was closed for a holiday.
The Greek debt impasse continued to put a cap on the euro. Jean-Claude Juncker, the head of the group of countries using the euro, said in a radio interview Saturday that highly indebted Greece needs a "soft, voluntary restructuring" of its debt. Meanwhile, the European Central Bank has so far rejected any kind of restructuring.
"There could be still twists and turns" before a bailout plan for Greece is hammered out ahead of the EU's leaders meeting June 23 and 24, said Mizuho Securites' Hayashi.
"The euro may weaken to $1.43, but a sharper fall like we saw in May to $1.40 is unlikely, while its upside could be limited at around $1.4500," Hayashi said. The euro/dollar's direction is likely to be influenced by a slew of U.S. economic indicators, including May retail sales Tuesday and housing starts Thursday, he said.
Elsewhere, the New Zealand dollar fell on reports of two large aftershocks in Christchurch after a magnitude 5.2 earthquake struck earlier, says a senior dealer at a major trust bank in Tokyo.
The New Zealand dollar was at Y65.51, off an earlier high of Y66.11. The pair may fall to Y65.00 later in the global day, says Junichi Ishikawa, FX analyst at IG Markets Securities.
The U.K. pound was at $1.6227 from $1.6223. The dollar was at CHF0.8454 from CHF0.8431. The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 74.863 from 74.836.
Interbank Foreign Exchange Rates At 00:50 EDT / 0450 GMT
