Dollar comes under pressure in Asia

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TOKYO (AFP) – The dollar came under pressure in Asia on Tuesday after sinking in New York following a poor manufacturing report that pointed to weakness in the world s largest economy.

 

The greenback fell below 100 yen for the first time in nearly a month on Monday as the ISM purchasing managers index for May showed a surprise contraction.

 

Markets are watching US jobs data this week for more clues about the state of the economy, a key factor in whether the US Federal Reserve rolls backs its monthly asset-buying plan, known as quantitative easing, in the near term.

 

“The market was priced for virtually no change in May (for manufacturing activity) but the outcome was on the soft side, immediately spurring selling of the US dollar,” National Australia Bank (NAB) said.

 

Credit Agricole added that “hesitation ahead of Friday s payrolls data may also explain some of the inability of the (dollar) to strengthen”.

 

In morning Tokyo trade the dollar fetched 99.58 yen, against 99.52 yen in New York late Monday, although it is down considerably from the levels around 100.46 yen in Asia earlier Monday.

 

Yuji Saito, director of foreign exchange at Credit Agricole, said markets would keep a close eye on a speech on Wednesday by Japanese Prime Minister Shinzo Abe about the government s growth strategy.

 

Investors “will be watching to see if there is anything that would excite Japanese stock markets,” he told Dow Jones Newswires.

 

Movements in dollar-yen trade and the Tokyo stock market are closely interlinked as the value of the currency directly affects the profitability of Japanese exporters.

 

Japanese officials Tuesday played down the yen s volatility, which has seen it fall from 80 to the dollar in November to 103 last month.

 

“The yen has rapidly weakened from such high levels,” Chief Cabinet Secretary Yoshihide Suga told a regular press briefing.

 

“It is natural for the market to adjust itself.”

 

The euro bought $1.3062 and 130.09 yen from $1.3076 and 130.13 yen in US trade, with the single currency supported by May manufacturing176879_84310421

2013-06-04

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