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Global fears push dollar below ¥97.50

JIJI

The dollar fell below ¥97.50 in Tokyo trading Wednesday as weak readings in U.S. and other overseas economic data raised concerns over the global economic outlook.

At 5 p.m., the dollar stood at ¥97.44-45, down from ¥97.80-80 at the same time Tuesday. The euro was at $1.3171-3172, up from $1.3077-3079, and at ¥128.35-42, up from ¥127.92-94.

In overseas trading overnight, the dollar briefly slipped below ¥97 following data showing that the Chicago purchasing managers index for April fell to a 3½-year low of 49.0 and slipped below the boom-or-bust dividing line of 50, market sources said.

Carrying over the sluggish tone into Tokyo trading, the dollar was weak below ¥97.50 early.

“The dollar was apparently hit by position-adjustment selling” before the release of U.S. economic data later Wednesday, an official of a major Japanese bank said.

The dollar subsequently came under added selling pressure and fell to near ¥97 at one point due to sluggish readings of the purchasing managers’ index for the Chinese manufacturing sector for April, market sources said.

But the U.S. currency resisted falling further, thanks partly to buying on dips at levels around ¥97, an official of another domestic bank said.

As a wait-and-see mood grew strong, the dollar was later stuck in a narrow range below ¥97.50.

“Since many overseas markets are closed Wednesday for May Day holidays, trading became slow,” a foreign exchange broker said.

“Dollar-yen trading has been susceptible to dollar-negative factors in recent sessions, so the dollar is expected to accelerate its downswing if the ADP and other U.S. economic data turn out to be weak,” an analyst at a bank-affiliated brokerage house said.