Dollar treads water ahead of U.S. data on first-quarter GDP
By William L. Watts and Sarah Turner, MarketWatch
FRANKFURT (MarketWatch) — The Japanese yen held a modest gain versus the dollar Friday, rebounding from sharp losses made immediately after the Bank of Japan announced more monetary-easing measures.
The ICE dollar index DXY -0.52% , which measures the greenback against a basket of six currencies, stood at 78.836, down from 79.138 late Thursday.
The dollar USDJPY -0.5800% bought ¥80.55, down from ¥80.94 in late North American trading on Thursday. The dollar jumped well above the ¥81 level right after the Japanese central bank’s decision.
The euro EURJPY -0.3198% traded at ÂĄ106.66, down from ÂĄ107.27 in late trading the previous day.
“Most of the majors are treading in well-worn ranges but JPY leads …shrugging off another round of [Bank of Japan] easing,” said Elsa Lignos, strategist at RBC Capital Markets in London.
The central bank increased the size of its asset-purchase program by about 5 trillion yen ($61.7 billion), meeting some analysts’ expectations but falling short of the aggressive action that economists say is required to end Japan’s deflation. It also left its policy interest rates unchanged in the range of 0% to 0.1%.
The Bank of Japan said it would increase the net size of its asset purchases to ÂĄ70 trillion, up from about ÂĄ65 trillion at present. Read more on Bank of Japan,
“Overall, a damp squib. The Nikkei jumped on the headline of ¥10 trillion but would surely have risen anyway following overnight strength on Wall Street,” said Julian Jessop at Capital Economics.
Tokyo’s Nikkei Stock Average JP:100000018 -0.43% ended the day in negative territory. Read Asia Markets.
Also Friday, the euro EURUSD +0.2636% trimmed a loss to trade at $1.3242, from $1.3243 the previous day, after Standard & Poor’s downgraded its rating on Spanish sovereign debt by two notches. Read more on Spain’s S&P downgrade.
The dollar remained little changed against the euro after a report showed the U.S. economy grew 2.2% in the first quarter, a slower pace than analysts expected.
The British pound GBPUSD +0.3907% traded at $1.6232, up from $1.6192.
The euro traded at 1.2014 Swiss francs EURCHF -0.0408% , little changed from Thursday and near the CHF1.20 floor set by the Swiss National Bank last year in an effort to arrest the rise of the franc.
In a speech Friday, Swiss National Bank Chairman Thomas Jordan said the floor was ”still in force, without any restriction.”
The central banker also said the franc remains significantly overvalued at CHF1.20 versus the euro and remained a major challenge for the Swiss economy.
But strategists said a strengthening outlook for Switzerland and euro-zone problems could soon force the central bank to again intervene to defend the level.
“Should the Swiss economy remain resilient over the course of this year, and Europe sink further into the mire, then traders are likely to retest the resolve of the SNB later in the year,” said Michael Derks, chief strategist at FxPro in London.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt.
Sarah Turner is MarketWatch's bureau chief in Sydney.
