MW: Dollar steady against yen as risk sentiment improves
TOKYO--The dollar was steady against the yen in Asia trade Thursday, with improvement in risk sentiment in stock markets prompting sales of the Japanese currency, which is often considered a safe haven.
The U.S. dollar USDJPY, +0.28% was at ¥119.97, compared with ¥119.95 late Wednesday in New York.
The greenback firmed against the yen from early Asian trade, tracking overnight its gain encouraged by a rebounding stock market on the Wall Street and upbeat U.S. durable manufactured goods orders.
Market participants said the solid stock market performance in Asia, including in Tokyo and Shanghai, helped improve risk sentiment and support the dollar.
In Tokyo, the Nikkei Stock Average NIK, +1.08% was up 1.1% midday at 18,584.26, on the track to close higher for the second consecutive session after climbing 3.2% Wednesday.
Read: Asian markets rebound, boosted by central banks, U.S. data
After opening with a 1.7% gain, the Shanghai Composite Index SHCOMP, +5.34% was recently trading up 1.5%.
The dollar briefly turned down to touch as low as ¥119.82 early in Tokyo, following the Bank of Japan Gov. Haruhiko Kuroda’s speech before audiences in New York. But the greenback later bounced to stay above the ¥120-mark for the most of the session.
Kuroda said there was no need to expand the central bank’s asset purchase program for now, and also that the “excessive appreciation” of the yen has been corrected. His comments came at the time when Japan’s economy is slowing and its core inflation reading is on the verge of turning negative.
With the stock markets showing signs of stability after suffering from a China-induced global selloff this week, investors are turning their eyes on the timing of the Federal Reserve’s plan to raise short-term interest rates for the first time since 2006.
“The market will be looking for a hint on when the Fed will start raising rates,” from remarks by Fed officials at Jackson Hole conference later this week, said Shinichiro Kadota, vice president of research at Barclays in Tokyo.
Federal Reserve Bank of New York President William Dudley said Wednesday that boosting short-term rates next month looks “less compelling” in light of the market’s volatility and worrisome news out of China.
The dollar was weaker against the euro EURUSD, +0.0442% which rose to $1.1343 midday from $1.1315. The common currency EURJPY, +0.34% also gained to ¥136.08 from ¥135.69 late Tuesday.
The euro bounced from losses overnight that came after comments by European Central Bank chief economist Peter Praet, who said the risk of a lengthy period of very low inflation in Europe has intensified due to falling commodity prices and slower growth in emerging markets. The comments raised hopes that the ECB could unveil new stimulus measures in coming weeks.
The WSJ Dollar Index BUXX, -0.13% a measure of the U.S. dollar against a basket of major currencies, was down 0.11% at 88.00.
