The dollar was top heavy around ¥95 in Tokyo trading late Monday, capped by selling from Japanese exporters, while traders were awaiting a policy-setting meeting of the U.S. Federal Reserve later this week.
At 5 p.m., the dollar was quoted at ¥94.99-95.00, against ¥95.10-12 at the same time Friday. The euro was at $1.3346-3348, against $1.3322-3324, and at ¥126.78-83, against ¥126.71-74.
The dollar traded below ¥94.50 in the early morning after briefly slipping below ¥94 in New York trading Friday, brought down by weak U.S. consumer sentiment and other data.
But the greenback gradually extended gains later and briefly surpassed ¥95 in late trading as the Nikkei 225 sharply bounced back after opening with losses.
Even so, the U.S. currency’s topside was capped at levels around ¥95 due to sell orders from exporting firms that missed opportunities to sell the dollar during its recent steep pullback.
“There is no news directly affecting the currency market, so the market is moving in line with stock price fluctuations,” an official at a major securities firm said.
Currency traders are focusing on the U.S. central bank’s Federal Open Market Committee meeting that ends Tuesday and the followup news conference by Fed Chairman Ben Bernanke.
Traders are paying attention to Bernanke’s remarks for any hints about when the Fed will begin to scale back its quantitative monetary easing.
During congressional testimony May 22, Bernanke said the Fed will be able to slow down asset purchases over the next few FOMC meetings if a sustained recovery of the job market is confirmed, triggering financial market turbulence.
“There are growing expectations for market-reassuring comments from Bernanke,” the securities firm official said. But if Bernanke fails to meet such expectations, “the dollar-yen rate will face greater downside risks.”
Once source said there are stop-loss sell orders lined up for the dollar below ¥94, and speculation of selling above ¥95.40.
Among key U.S. economic data due out later Monday were the Federal Reserve Bank of New York’s manufacturing business index and the home builder confidence index, both for June.