The dollar rose above ¥102.30 in Tokyo trading Thursday, reflecting widening interest rate gaps between the United States and Japan after remarks by U.S. Federal Reserve Chairwoman Janet Yellen raised speculation about an earlier than expected rate hike.
But the dollar then took a breather, its topside capped by position-adjustment selling ahead of Japan’s three-day weekend.
At 5 p.m., the dollar stood at ¥102.36-37, up from ¥101.57-58 at the same time Wednesday. The euro was at $1.3838-3840, down from $1.3922-3923, and at ¥141.66-73, up from ¥141.41-43.
The greenback held firm above ¥102.40 in early trading after soaring about ¥1 in New York overnight in line with a jump in U.S. Treasury yields triggered by Yellen’s remarks.
She signaled a possibility that the Fed may end its quantitative easing policy in the autumn and begin raising interest rates some six months later. Her remarks came after the U.S. central bank decided at its two-day Federal Open Market Committee meeting through Wednesday to continue tapering asset purchases under the policy.
“It is now hard to aggressively sell dollars as expectations grew that an interest rate hike by the Fed would be earlier than the previously expected latter half of 2015,” an official at a foreign exchange margin trading service firm said.
But a tumble of the Tokyo stock market that followed the New York equity market’s poor performance put pressure on the dollar. The U.S. unit eased to around ¥102.20 in midmorning Tokyo on selling from Japanese exporters.
In the afternoon, players “moved to sell dollars to lock in profits” ahead of the long weekend, a foreign exchange broker said.