The dollar rose above ¥99.60 in Tokyo trading Tuesday, inspired by a sharp rise in Tokyo stock prices, but its upside was capped due to profit-taking.
At 5 p.m., the dollar stood at ¥99.63-67, up from ¥99.33-34 at the same time Monday. The euro was at $1.3173-3174, down from $1.3209-3210, and at ¥131.22-25, against ¥131.21-23.
In morning trading, the dollar rose to around ¥99.70, reflecting its solid tone carried over from overseas trading overnight.
But the dollar was soon hit by selling aimed at locking in profits, market sources said.
In the afternoon, the dollar was pressured versus the yen as it lost ground against the Australian dollar after the Reserve Bank of Australia kept its key interest rate unchanged at a monetary policy meeting.
As Tokyo stocks extended gains sharply,the dollar attracted renewed demand later.
Concern over the situation in Syria has receded and speculation is growing that the U.S. Federal Reserve will start scaling down its quantitative easing as early as this month, markets sources said.
After European investors joined trading in late hours, the dollar drew renewed demand and stayed solid above ¥99.50.
Still, the dollar’s upside was limited as “sell orders were lined up at levels between ¥99.80 and ¥100,” a foreign exchange broker said.
“Although supported by the surge in stock prices, the dollar failed to chase higher ground before the U.S. government’s jobs data for August,” due out Friday, a major Japanese bank official said.
In view of the possibility of the U.S. jobs data affecting the Fed’s decision on its quantitative easing, an official at a major Japanese bank said that “investors are finding it difficult to place aggressive buy orders for the dollar.”