By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch) — The dollar edged down against its major counterparts Tuesday, pressured by strength in gold and worries about the U.S. debt situation.
The dollar index DXY -0.52% , which tracks the U.S. unit’s performance against a basket of six currencies, slipped to 75.081 from 75.343 in late North American trading on Monday.
The euro EURUSD +0.48% rose to $1.4176 from $1.4120 late Monday. See real-time currency quotes and tools.
Gold for August delivery GC1Q +0.31% pushed above $1,600 an ounce in electronic trading on Monday. Read more about gold breaking $1,600 an ounce.
Gold is traded in dollars, meaning a sharp move in one typically fuels an inverse in the other. Gold’s strength has been adding to pressure on the U.S. unit.
Against the Japanese yen, the dollar USDJPY -0.01% bought ¥79.01, compared with ¥79.02 late Monday.
Though a Japanese financial official as well as a monetary official both commented on the yen’s strength on Tuesday, most strategists think the Ministry of Finance is unlikely to request that the Bank of Japan intervene around current levels.
Speaking to Japan’s parliament, Finance Minister Yoshihiko Noda repeated his recent warning that currency moves were one-sided, and said he was closely watching exchange rate moves, according to media reports.
Also in parliament, Bank of Japan Deputy Governor Hirohide Yamaguchi suggested the central bank could ease its policy further or take other measures if the yen continued to rise.
“A yen rise has merits such as lowering import costs. But Japan’s economy is just emerging from a slump after the earthquake, so we need to closely watch its negative impact such as triggering declines in exports and on corporate revenues as well as worsening business sentiment,” Yamaguchi said, according to Reuters.
“We will take appropriate action when necessary with an eye on the negative impact” of yen strength, he was quoted as saying.
The dollar should hold its all-time low of ¥76.25, barring a European market melt-down on sovereign debt woes or another round of quantitative easing from the U.S. Federal Reserve, Tomoko Fujii, senior FX strategist at Bank of America Merrill Lynch, said in a note to clients.
“Still, we admit that there is a risk of radical risk aversion triggered by European and/or U.S. sovereign risk concerns, which could lead to bigger-than-expected USD/JPY declines,” she added.
The British pound GBPUSD +0.48% bought $1.6124, up from $1.6057 late Monday.
The Australian dollar AUDUSD +0.56% traded at $1.0664, up from $1.0605 late Monday, but its gains were checked by the dovish tone of the minutes of the interest-rate meeting of the Reserve Bank of Australia.
The minutes, released Tuesday, showed that board members adopted a wait-and-see attitude to interest rates before the next reading on consumer inflation at the end of July. Read more on Reserve Bank of Australia minutes.
“The RBA proved to be less hawkish than expected in its minutes, dropping the reference to the need for tighter policy, suggesting that the central bank may remain stationary for the rest of the year,” said Boris Schlossberg, director of currency research at GFT.
“In short, the RBA remains in a wait and see mode and is unlikely to tighten monetary policy further unless it sees marked pick up in inflation over the near term horizon,” he said in emailed comments.
Lisa Twaronite is MarketWatch's Tokyo bureau chief.
