The dollar traded around ¥98.50 in late Tokyo trading Tuesday after paring earlier losses, fluctuating in synchronization with Japanese stock price swings.
At 5 p.m., the dollar was at ¥98.35-38, against ¥98.40-42 at the same time Monday. The euro was at $1.3258-3260, against $1.3287-3289, and at ¥130.45-45, against ¥130.74-77.
The dollar was on a weak note in morning trading after a better than expected reading in the U.S. Institute for Supply Management’s nonmanufacturing index for July failed to boost the currency in overnight New York trading.
The greenback briefly slipped below ¥98 on the heels of the Nikkei 225 stock average’s losses in the morning, but it bounced back to levels around ¥98.50 as the Nikkei staged a sharp rebound in the afternoon.
The U.S. unit was partly supported against the yen by a rally in the Australian dollar after the Reserve Bank of Australia announced an interest rate cut, traders said.
Still, the dollar’s topside remained heavy following weaker than expected U.S. employment data released late last week.
“Although dollar-long positions had mounted ahead of the jobs report as well as last week’s policy-setting meeting of the U.S. Federal Reserve, the two key events passed without fueling expectations that the Fed could soon begin to taper asset purchases,” an official at a major Japanese bank said, adding, “Position-adjustment is now inevitable as traders are going to have summer holidays.”
Many dollar buying orders are now observed at around ¥97.50, while a number of selling orders are at around ¥98.80, a market source said, noting if the ¥97.50 level is breached, the dollar could accelerate a downswing.