Business / Financial Markets | CURRENCY MARKET

Strong U.S. housing starts thrust dollar above ¥103

The dollar shot above ¥103 in Tokyo trading Wednesday on purchases driven by a stronger-than-expected U.S. economic indicator released overnight, as well as speculative buying.

At 5 p.m., the dollar stood at ¥103.29-29, up from ¥102.59-60 at the same time Tuesday. The euro was at $1.3293-3293, down from $1.3350-3351, and at ¥137.31-32, up from ¥136.96-98.

In early Tokyo trading, the dollar was moving around ¥102.90, after topping the resistance level of ¥102.70 in New York hours after the U.S. Commerce Department’s announcement that housing starts jumped 15.7 percent month on month in July.

The greenback gained further ground to hit ¥103 in the morning but failed to keep its momentum, slipping below the line on selling to lock in profits.

“The dollar, which is expected to remain in a narrow range for the time being, tends to be hit by profit-taking selling whenever it nears the upper side of the range,” an official at a major Japanese bank said.

Meanwhile, players reacted little to the release of Japan’s trade statistics for July, which showed that the customs-cleared trade deficit totaled ¥964 billion, far worse than a market’s deficit projection of ¥695.3 billion.

After the dip, the dollar drew renewed purchases and rose to around ¥103.20 in midafternoon, partly aided by loss-cutting purchases triggered by speculative buying that came as trading turned thin, market sources said.

“As the dollar rose comfortably above ¥103, it attracted renewed buying,” an official at a foreign-exchange broker said.

In later hours, the dollar met with another round of profit-taking but resumed its advance after showing resilience on the downside, market sources said.

Still, an official at a foreign-exchange margin trading service firm said that the dollar is unlikely to keep attracting buying ahead of a closely watched speech by Federal Reserve Chairwoman Janet Yellen at an economic and financial symposium in Jackson Hole, Wyoming, on Friday.

Another major Japanese bank official said that investors are finding it difficult to step up dollar purchases, fearing that the greenback will plunge if tensions in eastern Ukraine heighten again.

But one market source said that the dollar can gain further ground against the yen because the U.S. economy is better than the Japanese economy.

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