Friday, Oct 19, 2012

--Dollar holds onto overnight gains against yen, staying solid above Y79.00

--Rise above Y80 mark possible next week if improvements in U.S. economy continue

--Surprise-free EU summit has no impact so far on euro 


 
   By Tatsuo Ito

The dollar steadied against the yen in Asian trading Friday after jumping to a two-month high in New York amid brighter signs coming from the U.S. economy and growing expectations that the Bank of Japan will take further easing steps later this month.

At 0450 GMT, the dollar was at Y79.30 from Y79.28 in late New York trading Thursday. The greenback found a firm footing above the Y79 mark in Asia but many traders were reluctant to push the pair higher amid a lack of fresh cues.

The dollar rose as high as Y79.47 overnight in New York, its highest level since Aug. 21, after manufacturing activity in the Philadelphia area expanded in October for the first time since April.

"The point is how long improvements in the U.S. economy and expectations of BOJ's additional monetary easing will last," said Dai Sato, vice president of Mizuho Corporate Bank's currency division.

"Given that we are still some way off the BOJ's board meeting (on Oct. 30) and key U.S. October jobs data (in early November), there is scope for the dollar to gradually nudge higher and a testing of the key Y80 mark is possible next week," he added.

Mr. Sato said the near-term focus is on the pair's finishing mark later in the global day and whether the dollar finishes above Y79.00. Should the closing level be below Y78.80 that may suggest to the market that the recent rally is ending, he said.

Marito Ueda, senior managing director at FX Prime Corp, said "the pair has hit a long-term bottom" after falling as low as Y76.00 in February, adding that he expects the pair to edge up toward Y82 by the end of the year.

Traders said the dollar's ascent could be gradual as the U.S. Federal Reserve has said low interest rates will continue through mid-2015, even if there is more positive data coming out of the U.S. economy.

Meanwhile, European leaders agreed overnight to have the euro zone's new supervisor for banks up and running next year. The leaders didn't hold lengthy discussions on the financing problems of the Greek and Spanish governments.

"The European issue is not a focus right now," Mizuho's Mr. Sato said, adding that the outcome of the EU summit hasn't produced any surprises.

The euro was at $1.3071 from $1.3067. while the pound was at $1.6061 from $1.6044.

The Wall Street Journal Dollar Index, which measures the dollar against a basket of currencies, was little changed at 69.535 from 69.548. 


 
Interbank Foreign Exchange Rates At 0050 EST / 0450 GMT 
 
                         Latest         Previous  %Chg     Daily    Daily  %Chg 
                                        2150 GMT            High     Low   12/31 
USD/JPY Japan            79.29-32       79.23-33  +0.03    79.40    79.26  +3.11 
EUR/USD Euro            1.3070-74      1.3059-75  +0.04   1.3077   1.3060  +0.86 
GBP/USD U.K.            1.6060-64      1.6039-49  +0.11   1.6065   1.6042  +3.35 
USD/CHF Switzerland     0.9243-48      0.9245-50  -0.02   0.9255   0.9239  -1.35 
USD/CAD Canada          0.9849-54      0.9849-56  -0.01   0.9858   0.9846  -3.51 
AUD/USD Australia       1.0364-68      1.0363-70   0.00   1.0381   1.0358  +1.54 
NZD/USD New Zealand    0.8195-200      0.8181-87  +0.17   0.8202   0.8178  +5.42 
 
Euro Rate 
 
EUR/JPY Japan           103.64-68      103.56-61  +0.08   103.80   103.58  +4.12 
 
Source: ICAP PLC

Write to Tatsuo Ito at tatsuo.ito@dowjones.com

(END) Dow Jones Newswires

October 19, 2012 01:43 ET (05:43 GMT)