ND: Dollar Gains Tad, Supported By View Fed Won't Ease
--Dollar edges up vs rivals on view Fed won't signal more easing at Jackson Hole
--Continued concerns over yen intervention drag on demand for the currency
By Andrew Monahan
Of DOW JONES NEWSWIRES
TOKYO -(Dow Jones)- The dollar gained slightly on its counterparts in Asia Thursday, supported by growing speculation that Federal Reserve Chairman Ben Bernanke likely won't pledge any additional monetary easing in a speech at the central bank's gathering in Jackson Hole Friday.
Some observers say the fact that Bernanke has not said anything to encourage the view that he will signal further action highlights the unlikelihood of such a move. A Wall Street Journal report said Bernanke's aides have also been quiet on the subject.
"This makes sense when you consider that in its meeting just a few weeks ago the Federal Open Market Committee already said it will keep short-term interest rates around zero for the next two years," said Satoshi Tate, a senior dealer at Mizuho Corporate Bank. "It's unlikely Bernanke would go beyond this now."
The absence of any additional monetary easing steps, which would weigh on interest rates, would be positive for the dollar ahead, dealers and analysts said.
The euro could suffer as a consequence, some said.
The common currency has failed to bounce back to the recent high of $1.4500 it touched Tuesday. That means "it's important to suppose there's still the risk of it falling" even more sharply ahead, said Junichi Ishikawa, FX analyst at IG Markets Securities. It could drop to around $1.4250 in coming sessions, he said.
At 0450 GMT, the euro was at $1.4407, down from $1.4415 late Wednesday in New York. The dollar was also up against the yen, at Y76.98 from Y76.97. The ICE Dollar Index was at 74.051, up from 74.031. The euro traded hands at Y110.89 compared with Y110.94.
Dealers in Tokyo continued to say they don't expect the Japanese government's new measures against the strong yen to have any major impact for now. Japan on Wednesday announced a two-pronged offensive aimed at curbing the currency's strength, creating a $100 billion fund to help spur investments by companies operating abroad and imposing new rules requiring financial firms to disclose their foreign exchange holdings.
Still, that the Ministry of Finance unveiled such steps at all, "while they themselves would take a longer time to have an effect, suggests it remains poised also for more actual intervention if need be," said Mitsuru Sahara, a senior FX dealer at Bank of Tokyo-Mitsubishi UFJ. The continued threat of intervention should keep the dollar above around Y76.60 for now, he said.
