MW:Dollar rebounds back above ÂĄ101 in volatile trade
By Barbara Kollmeyer and Carla Mozee, MarketWatch
MADRID (MarketWatch) -- The U.S. dollar rebounded back above 101 yen on Thursday after sliding in the wake of another sharp tumble for stocks in Japan.
Against Japan’s currency, the U.S. dollar USDJPY +0.56% traded as low as ¥100.44, but was lately trading at ¥101.74, up form ¥101.10 late Wednesday.
Simon Smith, chief economist at FxPro, said volatility for the dollar should be expected in the next two session as the month draws to a close. He said there wasn’t a strong fundamental reason pushing the dollar around.
“Month’s end is tomorrow, and people are squaring up positions or rebalancing portfolios and this is always a day when markets are least rational of any day and you think why is this happening and try to find fundamental reasons,” Smith said. “A lot of it is positioning…so for the next day or so it’ll remain pretty volatile.”
He added that markets are already looking to next week’s nonfarm payroll data for clues as to when the U.S. Federal Reserve will pare back its bond-buying program.
The dollar’s earlier push below the ¥101 threshold coincided with a 5.2% plunge for the Nikkei Stock Average JP:NIK -5.15% . The index had closed with a 0.1% gain on Wednesday.
Not helping the Nikkei’s prospects, Wall Street stocks suffered a sharp fall Wednesday amid concerns over fears the Federal Reserve will pare its bond-buying program, along with global growth concerns.
However the dollar regained its composure as U.S. stock market futures appeared to brush aside that fall in Japan stocks, moving higher ahead of an expected update for first-quarter U.S. growth data and weekly jobless claims.
Still, the volatility has some sitting on the sidelines. “We have been bullish on USD/JPY for some time and feel the pair can go higher, but we have reverted to the sidelines for now as the price action is all over the place,” said Chris Weston, chief market strategist at IG, in a note.
Weston said the Japan index just gave up and no one was buying. “All FX guys are watching the equity market at the moment…just confusion and erratic price action,” he said.
The ICE dollar index DXY +0.07% , which measures the greenback’s performance against six other major currencies, fell to 83.461 on Thursday, down from 83.680 on Wednesday.
The WSJ Dollar Index XX:BUXX +0.17% , a gauge of the currency’s moves against a slightly wider basket, fell to 75.29 from 75.25.
The dollar had also fallen against other key rivals on Wednesday.
The euro EURUSD +0.08% remained firmer against the dollar, fetching $1.2947, up from Wednesday’s level around $1.2930.
The British pound GBPUSD -0.01% lost ground, however, falling to $1.5119 from Wednesday’s $1.5121.
Aussie rebounds, then slips
The Australian dollar briefly bounced back Thursday against its U.S. rival, with strong Australia housing data helping the beleaguered currency fight off losses spurred by weaker figures on business investment. It moved a leg higher on dollar/yen action, but then retreated.
The Australian dollar AUDUSD -0.42% fetched 96.03 U.S. cents, down from 96.33 U.S. cents late Wednesday.
The Aussie has been beaten down this month, losing more than 7% against the U.S. dollar, also hurt by concerns about slowing in China, Australia’s biggest trading partner.
The Reserve Bank of Australia will assess the capital-expenditure report as they gather for a meeting on interest rates next week. The central bank early this month cut the key rate to a record low 2.75%.
