Dollar pauses in Asia as dealers look to Europe
Thursday, 5 July 2007
TOKYO, July 4 (AFP): The dollar took a breather in Asian trade today as the market looked ahead to this week's European interest rate decisions, with US markets closed for a national holiday, dealers said.
The dollar was steady at 122.42 yen in Tokyo afternoon trade, little changed from 122.40 in New York late Tuesday.
The euro firmed to 1.3617 dollars from 1.3610, in sight of its record high of 1.3682 reached on April 27. The single currency was steady at 166.63 yen after 166.61.
The British pound dropped to 2.0179 dollars from 2.0197 dollars, easing back from its highest level against the US currency since 1981.
Trading was thin as US markets were closed for the Independence Day holiday and with market players waiting for monetary policy meetings in Europe, said Yoshifumi Suzuki, forex dealer at Hachijuni Bank.
The Bank of England is expected to raise its benchmark lending rate by 25 basis points to 5.75 at its monetary policy meeting Thursday in a bid to dampen inflationary pressures.
The European Central Bank will meet the same day and is expected to leave its benchmark rate on hold at 4.0 per cent but the market will be looking for signals on a possible August rise, dealers said.
The market has been focusing on widening interest rate differentials, prompting them to sell low-yielding currencies such as the yen and to invest in higher-yielding assets such as the euro, the pound, and the New Zealand dollar.
Political factors are also weighing on the yen after Japanese Prime Minister Shinzo Abe suffered another blow Tuesday with the resignation of his defence minister over comments on the US atomic bombings of Japan.
The row has sparked speculation that the Bank of Japan, despite having independence in setting monetary policy, may hold off on raising interest rates until the political situation stabilises, dealers said.
The dollar edged up to 1.5228 Singapore dollars from 1.5219, to 919.60 South Korean won from 918.30, to 9,000 Indonesian rupiah from 8,997 and to 32.781 Taiwan dollars from 32.776.
The greenback slipped to 34.17 Thai baht from 34.33 and to 45.82 Philippine pesos from 46.24.
The dollar was steady at 122.42 yen in Tokyo afternoon trade, little changed from 122.40 in New York late Tuesday.
The euro firmed to 1.3617 dollars from 1.3610, in sight of its record high of 1.3682 reached on April 27. The single currency was steady at 166.63 yen after 166.61.
The British pound dropped to 2.0179 dollars from 2.0197 dollars, easing back from its highest level against the US currency since 1981.
Trading was thin as US markets were closed for the Independence Day holiday and with market players waiting for monetary policy meetings in Europe, said Yoshifumi Suzuki, forex dealer at Hachijuni Bank.
The Bank of England is expected to raise its benchmark lending rate by 25 basis points to 5.75 at its monetary policy meeting Thursday in a bid to dampen inflationary pressures.
The European Central Bank will meet the same day and is expected to leave its benchmark rate on hold at 4.0 per cent but the market will be looking for signals on a possible August rise, dealers said.
The market has been focusing on widening interest rate differentials, prompting them to sell low-yielding currencies such as the yen and to invest in higher-yielding assets such as the euro, the pound, and the New Zealand dollar.
Political factors are also weighing on the yen after Japanese Prime Minister Shinzo Abe suffered another blow Tuesday with the resignation of his defence minister over comments on the US atomic bombings of Japan.
The row has sparked speculation that the Bank of Japan, despite having independence in setting monetary policy, may hold off on raising interest rates until the political situation stabilises, dealers said.
The dollar edged up to 1.5228 Singapore dollars from 1.5219, to 919.60 South Korean won from 918.30, to 9,000 Indonesian rupiah from 8,997 and to 32.781 Taiwan dollars from 32.776.
The greenback slipped to 34.17 Thai baht from 34.33 and to 45.82 Philippine pesos from 46.24.