By Hiroyuki Kachi
The dollar remained steady against the yen in Asia trade
Wednesday after hitting Y123.33, its highest level in nearly eight
years.
Around 0450 GMT, the U.S. currency was at Y123.11 almost
unchanged from Y123.10 late Tuesday in New York.
The greenback held on to its gains overnight that followed U.S.
data showing improved business investment, housing market and
consumer confidence. After a bout of selling on profit taking, the
dollar managed to recoup these losses and extended gains in
mid-morning, with Japanese corporate investors placing dollar
buying orders related to commercial trade settlement ahead of the
end of the month. It then hovered above the Y123-line with no clear
direction for the rest of the Asia session.
"There has been a distinct difference in the dollar-yen pair
trade between when it moves and when it doesn't," said Mizuho
Securities chief FX strategist Kengo Suzuki. "Once it starts
moving, investors are jumping on the story, thus persistently
preventing it from falling," said Mr. Suzuki.
In addition, Mr. Suzuki said comments by Japan's Chief Cabinet
Secretary Yoshihide Suga put investors cautious about jawboning
from U.S. and Japan authorities at ease.
Mr. Suga reiterated earlier Wednesday that he doesn't see the
current foreign exchange moves as rapid.
Still, some contend the dollar's rally against the yen since
yesterday came without an uptick in U.S. Treasury yields, which is
something that is difficult to explain.
The dollar's upswing contradicts a recent narrowing of the gap
between U.S. and Japan bond yields, in a possible indication that
the pair's latest rally is "flow driven and only temporary," J.P.
Morgan said in a morning note.
Investors remained skeptical about the timeframe of the Federal
Reserve's decision to raise short-term interest rates, given a soft
patch in the U.S. economy since the January-March quarter.
But a string of encouraging signs on the U.S. economy together
with Fed Chairwoman Janet Yellen reminded investors of the Fed's
rate increase, long before rival central banks. In fact, Ms. Yellen
said Friday the central bank is on track to raise interest rates
sometime this year.
On Tuesday, Richmond Federal Reserve Bank President Jeffrey
Lacker said he still hasn't decided whether to vote for an
interest-rate increase at the central bank's June 16-17
meeting.
"I haven't made up my mind yet about June," he told reporters
after a speech. "I am going to wait and see what the data
reveals."
Among other currency pairs, the euro was at $1.0889 from
$1.0872, while the common currency was at Y134.03 from Y133.85.
The WSJ Dollar Index, a measure of the dollar against a basket
of major currencies, was down 0.09% at 87.11.
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT
Latest Previous %Chg Daily Daily %Chg
Dollar Rates Close High Low 12/31
USD/JPY Japan 123.09-10 123.10-11 -0.01 123.32 122.94 +2.81
EUR/USD Euro 1.0887-90 1.0872-75 +0.14 1.0891 1.0865 -10.00
GBP/USD U.K. 1.5393-95 1.5382-84 +0.07 1.5400 1.5377 -1.18
USD/CHF Switzerland 0.9512-16 0.9532-36 -0.21 0.9541 0.9512 -4.31
USD/CAD Canada 1.2425-30 1.2431-36 -0.05 1.2443 1.2421 +6.94
AUD/USD Australia 0.7747-51 0.7734-38 +0.17 0.7755 0.7725 -5.16
NZD/USD New Zealand 0.7249-55 0.7226-32 +0.32 0.7258 0.7218 -6.97
Euro Rate
EUR/JPY Japan 134.00-04 133.84-88 +0.12 134.03 133.78 -7.53
Source: ICAP PLC
Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com