Dollar Tad Lower Against Yen in Quiet Asia Trade

 
   By Hiroyuki Kachi 
 

        The dollar was a tad lower against the yen in quiet trading in Asia on Monday, with a mid-afternoon downturn in the Nikkei Stock Average providing a cue for some buying of the Japanese currency in otherwise directionless trading.
        As of 0450 GMT, the dollar was at Y120.29 from Y120.38 late Friday in New York.
        Market trading was thin with many Japanese institutional investors and other market participants taking a break from the currency market for the year-end holiday season. The greenback remained largely directionless with no particular fresh cues during the first part of the Asia session.
        A sharp fall of more than 280 points in the Nikkei during a 25-minute spell after the lunch break, however, invited some cautious buying of the safe-haven yen. The U.S. currency weakened to Y120.28 as the benchmark index fell.
        While participants expect the volume of currency trading to pick up when some European and U.S. investors return to the market after the Christmas break later Monday, some say the U.S. currency still lacks momentum to make gains from where it is now.
        Minori Uchida, head of Tokyo global markets research at Bank of Tokyo Mitsubishi UFJ, said the dollar is unlikely to show the relatively high year-end volatility of the past two years. The dollar stayed around Y104 during the Christmas vacation in Asia trade last year, but then quickly gained momentum to hit as high as Y105.45 on Jan. 2.
        "The market is now in a period lacking in fresh cues," said Mr. Uchida, noting the major developments the market has encountered in recent weeks, such as the Bank of Japan's surprise easing, the snap election in Japan and the Federal Reserve's patient stance on an eventual rate increase in 2015.
        For the rest of the week, Mr. Uchida sees the dollar moving in a 119-121 range.
        "I think the upside will be a bit heavy," as the greenback was driven above the Y121 level largely by a spate of buying after upbeat U.S. labor data earlier in December.
        Mr. Uchida and other market participants said the currency market already seemed to have factored in a Greek parliament stalemate on electing a new president, so headlines out of Athens later in the day are unlikely to spark risk aversion, he said.
        Investors will instead look ahead to the release of the next U.S. indicators, including the ISM index on Friday for fresh trading cues. Upbeat readings from the data strong enough to suggest a faster timetable for a U.S. rate increase would likely put a lid on the uptick in U.S. stocks and the greenback may again find it difficult to make any gains again, said Mr. Uchida.
        In other currency trading, the euro was at $1.2192 from $1.2178 and at Y146.67 from Y146.61.
        The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was down 0.02% at 82.70.
        Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com
        (END) Dow Jones Newswires

        December 29, 2014 00:49 ET (05:49 GMT)

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