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Dollar holds steady after latest rally

JIJI

The dollar traded slightly above ¥101 in Tokyo late Tuesday, with its topside capped at around ¥101.30 following a sharp rally on strong U.S. employment data.

At 5 p.m., the dollar stood at ¥101.15-15, little changed from ¥101.14-15 at the same time Monday. The euro was at $1.2875-2876, up from $1.2829-2833, and at ¥130.24-25, up from ¥129.77-78.

The greenback sagged back below ¥101 in New York trading overnight, on the back of a pullback in U.S. Treasury yields and weighed down by profit-taking following the rally on data late last week that U.S. nonfarm payrolls grew 195,000 in June, more than market expectations of 165,000.

During Tokyo trading hours, the U.S. unit climbed back as high as around ¥101.30, led by the euro’s advance versus the yen on the back of increased risk tolerance following gains in Tokyo and other Asian stock prices, traders said.

But the dollar was top-heavy against the yen, partly because traders were awaiting the minutes of the U.S. Federal Reserve’s policy-setting meeting last month, due to be released Wednesday. A speech by Fed Chairman Ben Bernanke, also set for Wednesday, was also on players’ minds, traders said.

Following the strong U.S. jobs report, “the dollar is becoming firmer against the yen as the market is beginning to factor in the possibility that the Fed will begin to taper its third round of quantitative easing in September,” an official at a major brokerage firm said.

“Next month’s jobs data (for July) will be a major clue” to the timing of the U.S. central bank’s cut in asset purchases under the QE3, said an official at a foreign exchange margin trading service provider.