Japan’s yen hits new low on easing, stimulus worries
By Deborah Levine, MarketWatch
SAN FRANCISCO (MarketWatch) — The dollar lost ground against the euro but continued its climb against the Japanese yen Thursday, as indications point to the possibility that Washington may yet be able to cobble together a way to blunt the effects of an slowdown if the U.S. goes over the so-called fiscal cliff.
The dollar index DXY -0.19% , which tracks the U.S. unit against a basket of six major currencies, fell to 79.419 from 79.609 late Wednesday.
The euro EURUSD +0.19% rose to $1.3275, up from $1.3224 late Wednesday.
The dollar tends to move in the opposite direction as U.S. stocks, as traders see less need for the former as a safe haven. Wall Street opened Thursday’s session flat..
Against Japan’s currency, the dollar USDJPY +0.20% rose to 85.94 yen from ¥85.63 in the prior session — its highest in early 2010.
The greenback has benefited from movement by Japan’s leaders to loosen monetary policy even further in the hopes of sparking economic growth in the long-struggling country, where deflation is a bigger risk than inflation.
Sworn in this week, Prime Minister Shinzo Abe has already made comments on setting an inflation target of 2%, maintaining a dollar-yen level in a¥85-to-¥90 range and appointing a Bank of Japan governor whose views were aligned to those of Abe’s newly elected government. Read: Japan stocks hit post-earthquake high.
“I, like everyone else, am queasy at the notion that selling the yen is a ‘sure thing,’ ” said Kit Juckes, currency strategist at Societe Generale. “But if everyone is simply going to take Mr. Abe at his word, then we can go a lot further before this move is done.”
Also boosting the dollar, U.S. Treasury yields edged higher, which makes the greenback and U.S.-denominated assets more attractive to Japanese investors — one of the largest holders of U.S. bonds.
Yields on benchmark 10-year notes 10_YEAR -0.51% ticked up 1 basis point to 1.77%. Bond prices move inversely to their yields; a basis point is one one-hundredth of a percentage point.
Among other major currencies Thursday, the British pound GBPUSD +0.14% rose to $1.6171 versus $1.6135 a day earlier, while the Australian dollar AUDUSD -0.18% was little changed at $1.0374.
Deborah Levine is a MarketWatch reporter, based in San Francisco. Follow her on Twitter @dlevineMW.
