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Dollar dips ahead of ECB meeting

JIJI

The dollar drifted lower in Tokyo trading Thursday as traders retreated to the sidelines ahead of a policy-setting meeting of the European Central Bank and a subsequent news conference by its chief.

At 5 p.m., the dollar was at ¥93.50-54, down from ¥93.81-82 at the same time Wednesday. The euro was at $1.3527-3531, against $1.3544-3546, and at ¥126.49-54, against ¥127.06-08.

The dollar faltered due partly to a dip in U.S. long-term Treasury yields after topping the ¥94 threshold the previous day for the first time since May 2010.

“Expectations of a further rise of the dollar versus the yen are still strong, and traders are eager to repurchase the dollar at lower levels,” an official at a major Japanese bank said.

The dollar-yen pair ran out of major trading incentives following Bank of Japan Gov. Masaaki Shirakawa’s surprise announcement earlier this week that he plans to step down on March 19, earlier than the April 8 end of his five-year term, traders said. The announcement accelerated the yen’s fall.

Shirakawa spoke at a Lower House Budget Committee meeting Thursday, but his remarks had little impact on the currency market.

A wait-and-see mood strengthened before the ECB Governing Council was to meet later Thursday and ECB President Mario Draghi was to hold a news conference on any decision at the meeting.

While the ECB is widely expected to keep monetary policy steady, market players are focusing on whether Draghi will comment on the euro’s recent rapid rise.

The euro hit a 14-month high of $1.3711 late last week and a 34-month peak above ¥127 earlier this week.