The dollar traded above ¥97.70 in late Tokyo trading on Tuesday following a plunge below ¥96 on the heels of weak U.S. and Chinese economic data and deadly bomb attacks at the Boston Marathon.
At 5 p.m., the dollar stood at ¥97.74-78, down from ¥98.15-16 at the same time Monday. The euro was at $1.3047-3049, down from $1.3073-3075, and at ¥127.56-59, down from ¥128.33-34.
The dollar met with heavy selling in New York trading overnight, dragged down by the Chinese economy’s slower than anticipated growth in January-March and falls in the U.S. home builder confidence index and the Federal Reserve Bank of New York’s manufacturing activity index, both for April.
The greenback briefly plummeted below ¥96 in Oceanian trading in the early morning as a risk-averse mood spread further in the wake of the bomb explosions during the Boston Marathon, which killed three people and reportedly wounded more than 140.
However, the greenback pared its losses in Tokyo, supported by buying on dips and in line with Japanese stocks’ resilience following their sharp initial losses, traders said.
“We have now confirmed the dollar’s bottom (versus the yen) in the short term,” said a foreign exchange analyst, pointing out that the dollar was underpinned by buying on dips around ¥96.
At the same time, the dollar’s upside is expected to be limited for a while due to a dearth of further buying incentives.
“For gathering upward momentum again, the dollar needs evidence of U.S. economic recovery,” an official at a major Japanese bank said.