Dollar remains soft amid market caution
The dollar remained under pressure in Asian trade on Thursday as market players took to the sidelines ahead of Congressional testimonies by top US finance officials, analysts said.
By Agencies |
TOKYO: The dollar remained under pressure in Asian trade on Thursday as market players took to the sidelines ahead of Congressional testimonies by top US finance officials, analysts said.
The dollar slipped to 115.94 yen in Tokyo morning trade, down slightly from 116.07 in New York late on Wednesday.
The euro firmed to $1.3973 from $1.3957. The single European unit touched its record high level of $1.3988 briefly late Wednesday in the wake of the Federal Reserve's hefty half-point interest rate cut.
The euro was steady at 162.02 yen. Currency markets were subdued ahead of Congressional testimonies due later Thursday by Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson.
"After digesting big events, the market is now finding it difficult to move," said Nobuaki Tani, currency analyst at Resona Bank in Tokyo, referring to the US rate cut and the Bank of Japan's decision to hold rates steady.
A survey showing US consumer prices fell by 0.1 per cent in August fuelled speculation that further US interest rate cuts could be in the pipeline.
"Stock prices have surged but few people are optimistic" because of lingering concern about the impact on the global economy of problems in the US subprime mortgage sector catering to risky borrowers, he said.
Market players were "waiting to see fresh economic indicators, comments and earnings reports" as a cue for trading, Tani said.
Currency markets will be paying close attention to remarks from Bernanke and Paulson, as well as quarterly earnings results from major US investment banks, dealers said.
While the Fed rate cut helped ease uncertainty in financial markets, "it also narrows interest rate differentials between the US and other currencies," which could stem further dollar gains, Chuo Mitsui Trust and Banking forex dealer Yosuke Hosokawa said.
"And as the market expects more rate cuts in the United States, the stable stock market there may not provide more impetus to buy the dollar," he said.
Tani of Resona agreed that "the market undertone is for a weak dollar," adding that the euro could now top $1.4 in the near future.
"The euro is now marking time just below 1.4. It could surge ahead once it rises past the line," he said.
The dollar slipped to 115.94 yen in Tokyo morning trade, down slightly from 116.07 in New York late on Wednesday.
The euro firmed to $1.3973 from $1.3957. The single European unit touched its record high level of $1.3988 briefly late Wednesday in the wake of the Federal Reserve's hefty half-point interest rate cut.
The euro was steady at 162.02 yen. Currency markets were subdued ahead of Congressional testimonies due later Thursday by Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson.
"After digesting big events, the market is now finding it difficult to move," said Nobuaki Tani, currency analyst at Resona Bank in Tokyo, referring to the US rate cut and the Bank of Japan's decision to hold rates steady.
A survey showing US consumer prices fell by 0.1 per cent in August fuelled speculation that further US interest rate cuts could be in the pipeline.
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"Stock prices have surged but few people are optimistic" because of lingering concern about the impact on the global economy of problems in the US subprime mortgage sector catering to risky borrowers, he said.
Market players were "waiting to see fresh economic indicators, comments and earnings reports" as a cue for trading, Tani said.
Currency markets will be paying close attention to remarks from Bernanke and Paulson, as well as quarterly earnings results from major US investment banks, dealers said.
While the Fed rate cut helped ease uncertainty in financial markets, "it also narrows interest rate differentials between the US and other currencies," which could stem further dollar gains, Chuo Mitsui Trust and Banking forex dealer Yosuke Hosokawa said.
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"And as the market expects more rate cuts in the United States, the stable stock market there may not provide more impetus to buy the dollar," he said.
Tani of Resona agreed that "the market undertone is for a weak dollar," adding that the euro could now top $1.4 in the near future.
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"The euro is now marking time just below 1.4. It could surge ahead once it rises past the line," he said.
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