Breaking News
0

Dollar holds firm vs yen on hopes of detente in East Asia

ForexMar 28, 2018 09:24PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO:Illustration photo of U.S. Dollar and Euro notes

By Hideyuki Sano

TOKYO (Reuters) - The dollar held firm against the yen on Thursday, having made its biggest daily gain in more than a half year, helped in part by hopes of detente in East Asia.

The dollar changed hands at 106.82 yen , extending its rebound from Monday's 16-1/2-month low of 104.56. On Wednesday it gained 1.43 percent, the biggest rise since Sept 11.

China said on Wednesday North Korea's leader Kim Jong Un pledged his commitment to denuclearization while U.S. President Donald Trump tweeted that Kim looked forward to meeting with him.

Japan's Asahi newspaper reported on Thursday that Tokyo has sounded out the North Korean government about a bilateral summit, just days after Kim met Chinese President Xi Jinping.

All of this has prompted some speculation among traders that a diplomatic breakthrough over North Korea's nuclear program might be closer at hand than at anytime before, even though the hurdles to a solution remain stiff.

Because of Japan's status as a net creditor nation, the yen tends to be bought on rising geopolitical tensions and vice versa.

Some traders also noted, however, that currency trading so far this week has been driven by flows related to quarter-end, and for many Japanese firms, the financial year end, on March 31.

"There are a lot of noises this week. We feel quarter-end, and financial-year end flows are somehow larger this year than usual," said Bart Wakabayashi, Tokyo Branch Manager of State Street.

Traders say the dollar/yen's fall earlier this week could reflect Japanese exporters' dollar-selling before the financial year-end.

On the other hand, Wednesday's gains could stem from buying by Japanese investors for the new financial year as the currency deals will be settled next Monday, after the start of the new financial year.

The euro (EUR=) traded at $1.2310, having lost 0.75 percent on Wednesday and slipping further from Tuesday's high of $1.24765.

The euro was undermined by soft euro zone economic data and comments from some European Central Bank officials suggesting the ECB is in no hurry to wind back its stimulus given the specter of low inflation.

Although expectations of an exit from the ECB's stimulus had boosted the euro since last year, the common currency has been in a holding pattern since hitting a three-year high of $1.2556 on Feb. 16, with its March 1 low of $1.21545 seen as an immediate support level.

So for traders there is probably a lot running on German consumer price data for March, due at 1200 GMT.

That will be followed by U.S. consumption and price data, which will be closely watched for the Federal Reserve's monetary tightening outlook.

In the U.S. too, expectations of faster pace of tightening have been receding after the Fed last week stuck to its projection that three rate hikes are most likely this year, including the one it made in March.

Elsewhere, the Australian dollar hit a three-month low of $0.76515. The currency, often used as a proxy on bets on the Chinese economy, has been dogged by concerns over a trade war between the United States and China.

Dollar holds firm vs yen on hopes of detente in East Asia
 

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email