/

Greenback falls below ¥102.90

JIJI, Kyodo

The dollar pulled back below ¥103 in Tokyo trading Monday, pressured by position-adjustment selling after its surge last week and ahead of a key policy-setting meeting for the U.S. Federal Reserve this week.

At 5 p.m., the dollar was quoted at ¥102.86-87, down from ¥103.59-61 at the same time Friday. The euro was at $1.3751-3751, little changed from $1.3753-3755, and at ¥141.43-46, down from ¥142.49-56.

The greenback fell as low as around ¥102.60, with sales spurred by a weaker than expected reading in the HSBC China manufacturing purchasing managers’ index for December, traders said. The manufacturing PMI fell to 50.5 from 50.8 for November.

In the Bank of Japan quarterly “tankan” sentiment survey for December, the headline diffusion index improved to plus 16 from plus 12 in the September survey, but it had little impact on the currency market as the result was within market expectations, some traders said.

Yet Yuzo Sakai of Tokyo Forex & Ueda Harlow said that “unclear prospects shown by the survey led to the buying of the yen.”

The dollar’s pullback followed its ascent late last week to a five-year high close to ¥104 on growing expectations that the Fed will begin to scale back its quantitative monetary easing, or QE, at the two-day meeting of its Federal Open Market Committee that starts Tuesday.

“Traders will remain nervous until the end of the FOMC meeting,” said an official at a foreign exchange margin trading service provider.

Still, the dollar will be supported by buying on dips by those who missed buying opportunities in the rapid rise last week, said an official at a foreign-affiliated securities firm.

Following a spate of brisk U.S. economic indicators and a budget deal reached between Democrats and Republicans last week, some analysts see a greater chance of the Fed deciding to shave QE.

“The market consensus has not changed and forecasts the start of tapering next March,” an official at a bank-affiliated brokerage firm said, but “there is growing caution among traders about a possible December start.”