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China PMI lifts dollar over ¥98 line

JIJI

The dollar climbed above ¥98 in Tokyo trading Thursday, pushed up by data showing an improvement in manufacturing business conditions in China, although the upward momentum was limited by stock market weakness.

At 5 p.m., the dollar stood at ¥98.21-23, up from ¥97.57-59 at the same time Wednesday. The euro was at $1.3351-3352, down from $1.3392-3393, and at ¥131.13-16, up from ¥130.67-69.

The greenback drew buying interest from the outset of Thursday’s trading, on the back of a rise in U.S. Treasury yields following the release of minutes of the July 30-31 meeting of the Federal Open Market Committee, the U.S. central bank’s policy-setting panel.

The U.S. currency then got a lift from the report that the HSBC Flash China Manufacturing Purchasing Managers’ Index for August rose to a four-month high of 50.1 from 47.7 in July.

However, the dollar failed to further extend its gains versus the yen, overshadowed by lackluster performances of Japanese and other Asian stocks as well as a six-session fall of U.S. equities on concern over a possible scaling back of the Fed’s quantitative easing.

Although higher U.S. interest rates usually prompt dollar purchases, ” ‘risk off’ sentiment is prevailing now, making it difficult to buy the dollar aggressively,” an official of a foreign bank said.

There are persistent concerns that an exit of the Fed from the quantitative easing could destabilize emerging economy markets by promoting dollar outflows, traders said.

The FOMC minutes contained few fresh clues as to the timing of a policy change, but the Fed seems still on track to begin the tapering of asset purchases by the year’s end, possibly in September at the earliest, analysts said.