The dollar eased a little in range-bound trading above ¥103.50 in Tokyo on Friday, as investors retreated to the sidelines before a key U.S. economic event and ahead of the weekend.
At 5 p.m., the dollar stood at ¥103.76-76, down from ¥103.82-83 at the same time on Thursday. The euro was at $1.3287-3287, up from $1.3274-3274, and at ¥137.86-87, against ¥137.82-84.
The dollar briefly rose up to around ¥103.95 in the morning, backed by Tokyo stocks’ solid performance in the wake of a Wall Street rally overnight on the release of favorable U.S. economic data that included initial jobless claims. The greenback was also aided by purchases by Japanese importers.
But the dollar lost the upward momentum after the initial buying ran its course and fell to around ¥103.70 following Tokyo stocks’ downturn in the afternoon.
“When the dollar neared the psychologically important line of ¥104, profit-taking selling gathered steam,” an official at a foreign exchange broker said.
With the dollar rising close to the upper end of its ¥101-¥104 range since February, individual investors have become prone to selling, an official at a foreign exchange trading firm said.
In view of the U.S. currency’s failure to top ¥104, players gradually enhanced position adjustment selling ahead of the weekend, market sources said, adding that the favorable effects of the strong showings of the U.S. economic indicators did not last long after the dollar’s recent rally on expectations of an early rate hike by the U.S. Federal Reserve.
“Investors are believed to have reduced their dollar-long positions ahead of a closely watched speech by Fed Chair Janet Yellen” at a financial symposium in Jackson Hole, Wyoming, on Friday, an official at a major Japanese bank said.
Players were cautious about stepping up dollar purchases because the greenback may took a dive if Yellen stresses her dovish stance on interest rates, an official at another major Japanese bank said.
“As chances cannot be ruled out that the dollar-yen pair will show some volatile moves following Yellen’s speech, investors see no need to tilt positions for now,” a currency broker said.