Dollar Slightly Lower Against Yen Amid Weak Tokyo Stocks

 
   By Hiroyuki Kachi 
 

        The dollar was slightly lower against the yen in Asia trade Monday following weakness in Tokyo stocks, but trade remained quiet as investors took a wait-and-see stance ahead of economic events later this week.
        As of 0450 GMT, the greenback was at Y101.45, compared with Y101.50 late Friday in New York. Trading was directionless, with the greenback moving in an extremely tight range. The dollar rose slightly to as high as Y101.67, but lost some of its gains as Tokyo stocks stayed weak later in the session, encouraging buying of the yen, considered as safe harbor in times of financial uncertainty.
        As of 0450 GMT, the benchmark Nikkei Stock Average had fallen 0.3%.
        Also auguring against the dollar were last week's drop in U.S. Treasury yields to their lowest levels in more than six months. But that effect shouldn't last too long, said Koji Fukaya, president at FPG Securities in Tokyo.
        "There would be a limit to a falloff in long-term rates once the underlying trend of steady growth in the U.S. economy is confirmed through economic data," he said.
        Mr. Fukaya said there weren't many factors behind the dollar's weakness against the yen, with the main one being short covering related to position adjustment by speculators, supporting the view that the dollar's weakness against the yen has limits.
        With few fresh cues, investors are focusing on events later this week, including the release of the Federal Open Market Committee meeting minutes, Japan's trade balance, and the euro zone purchasing manager's index.
        "We are going to have a week with the dollar more likely to strengthen against the yen," said Yunosuke Ikeda, head of FX strategy and global markets research at Nomura Securities in Tokyo.
        He said that if the FOMC minutes to be published Wednesday give clues on the Federal Reserve's exit policy, that would be a surprise and may lead to higher U.S. Treasury yields and accompanying greenback strength.
        Mr. Ikeda also said the euro is vulnerable to selling against the dollar after economic data for the euro zone amid expectations U.S. interest rates will likely bottom out soon.
        The euro was at $1.3702 from $1.3695 and Y139.02 from Y139.01.
        The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was down 0.03% at 72.88.
        Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com
        (END) Dow Jones Newswires

        May 19, 2014 01:50 ET (05:50 GMT)