‘Many layers of uncertainty’ cited; Japan’s yen gains on greenback
By Polya Lesova and Sarah Turner, MarketWatch
NEW YORK (MarketWatch) — The dollar traded little changed against most other major currencies on Monday as euro-zone finance ministers met to discuss the next aid payment to Greece.
The ICE dollar index DXY +0.06% , which measures the greenback against a basket of six other currencies, lately stood at 80.245, up marginally from 80.190 on Friday.
“The last week of November has begun with a mildly consolidative tone in the foreign-exchange market,” Brown Brothers Harriman analysts wrote in a note to clients. “The U.S. dollar is trading in relatively narrow ranges around its pre-weekend lows.”
In Brussels, euro-zone finance ministers met to try to agree once again on approving Greece’s latest aid tranche.
“It is clear that there are still many layers of uncertainty lying ahead,” said strategists at Credit Agricole, citing last week’s failure to make progress in European Union budget talks, weekend elections in Spain and ongoing talks over Greece’s finances.
The euro EURUSD -0.03% traded at $1.2960 on Monday, down from $1.2983 on Friday.
The British pound GBPUSD -0.15% changed hands at $1.6014, off from $1.6040 in late Friday trading.
Spotlight back on the yen
While the dollar weakened slightly against the yen Monday, it remained relatively strong, having gained on the Japanese currency by 1.3% last week and by 3.3% so far in November.
The dollar USDJPY -0.28% bought 82.14 yen, down from ¥82.35 in late trading on Friday.
The Bank of Japan released minutes Monday from its Oct. 30 policy meeting, which showed that two members favored strengthening the wording of the central bank’s commitment to “powerful easing.”
The members wanted the Bank of Japan to say that it would continue with easing until its 1% inflation goal has been “steadily maintained” rather than the current wording, which states that it will ease until the goal is in sight.
With an election looming in December and Japan’s main opposition party stating that it wants to implement an inflation target of 2%, Barclays strategists said that “the timing of the more aggressive stance to target higher inflation is likely to depend on global factors as well, but the stars appear to be aligning for the changes to take place in the early part of 2013.”
They added: “A back-of-the-envelope calculation suggests the upward move in [the dollar against the yen] can be surprisingly steep in response to higher inflation expectations.”
Polya Lesova is MarketWatch's New York deputy bureau chief. Follow her on Twitter @PolyaLesova.
Sarah Turner is MarketWatch's bureau chief in Sydney. Follow her on Twitter @SarahTurnerMKTW.
