Dollar Lower Against Yen On Profit-Taking After Post-FOMC Rally

 
   By Hiroyuki Kachi 
 

        The dollar was lower against the yen in Asia trade Thursday, as investors moved to lock in profits after the greenback staged a rally following the outcome of the Federal Open Market Committee.
        As of 0550 GMT, the dollar was at Y118.43 from Y118.70 late Wednesday in New York.
        Earlier in the session, the greenback rose to as high as Y119.01, following on from the overnight rally after the FOMC meeting.
        The Federal Reserve said it would be patient about raising short-term interest rates. Fed Chairwoman Janet Yellen said the central bank was unlikely to raise rates for the "next couple of meetings," signaling a timeline for the eventual increase in U.S. interest rates at its April 2015 meeting at the earliest.
        But the dollar remained top heavy for the rest of the session in a sign of how investors still feel uneasy about underlying negative factors such as weakness in oil prices and the Russian ruble that have generated risk aversion in global financial markets.
        "The situation still hasn't fully opened up for risk-taking," said Minori Uchida, head of Tokyo global market research at Bank of Tokyo-Mitsubishi UFJ.
        Mr. Uchida said investors still have the impression that the dollar's recent rally has been "a bit excessive," while the latest FOMC outcome indicated that any rises in interest rates down the line are likely to be at a considerably moderate pace.
        Against that backdrop, Japanese market participants such as importers see the dollar as overpriced at its current value around the Y118 level, Mr. Uchida said. The Bank of Japan's Tankan business sentiment survey released earlier this week showed that big manufacturing companies have been operating on the assumption that the dollar will average Y103.36 this fiscal year ending March.
        "The level above Y119 is a selling zone" for profit taking, Mr. Uchida said.
        In other currency trading, the euro was at $1.2344 from $1.2342, while the common currency was at Y146.23 from Y146.49.
        Junichi Ishikawa, market analyst at IG Securities, said the euro may fall below $1.2300, given the diverging monetary policies of the eurozone and the U.S. and the advance in U.S. stocks, a move leading to an uptick in U.S. Treasury yields.
        The Wall Street Journal reported the European Central Bank executive board member Benoît Coeuré saying that the eurozone's central bank was closer to launching a large-scale asset purchase program focused on government bonds.
        The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was down 0.19% at 82.20.
        Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com
        (END) Dow Jones Newswires

        December 18, 2014 01:21 ET (06:21 GMT)

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