Dollar Tad Higher Against Yen After Smooth JGB Auction

 
   By Hiroyuki Kachi 
 

        The dollar was a tad higher against the yen in Asian trade Tuesday, driven by early afternoon selling of the Japanese currency that followed a smooth government bond auction.
        As of 0450 GMT, the dollar was at Y118.52 from Y118.44 late Monday in North America.
        Earlier in the session, the greenback lost momentum against the yen, with stock market weakness prompting investors to pick up the Japanese currency as a safe haven asset, briefly sending the U.S. currency as low as Y118.23. But the dollar later regained most of its earlier losses with investors covering their short positions. The Nikkei Stock Average was down 0.1% in afternoon trading.
        The dollar extended its gains later in the session, as the results of a 20-year JGB auction after the lunch break provided "a sense of safety" to broader market participants, said Mizuho Securities FX strategist Kenji Yoshii.
        The Ministry of Finance announced that it sold Y1.1 trillion in 1.2% 20-year bonds with a lowest price of Y98.80 yielding 1.275%, significantly higher than street forecasts. The bid-to-cover ratio improved to 3.51 from 3.26 at the last tender.
        But Mr. Yoshii said the dollar may find itself "vulnerable to selling pressure once it crosses the Y119-threshold," with looming fears about the Greek bailout talks.
        Talks among eurozone finance ministers over a new financing arrangement for Greece broke down abruptly Monday, demonstrating a wide gulf between Athens and its official creditors.
        Kumiko Ishikawa, an analyst at Gaitame.Com Research Institute said the dollar will likely find a direction after digesting indicators later today such as the New York Federal Reserve's manufacturing sector index for February and U.S. NAHB Housing Market Index for February. "The focus is on whether dollar can consolidate its downside support around its 20-day moving average of Y118.30 during the Asia session," said Ms. Ishikawa.
        Among other currency pairs, the euro remained almost flat against the dollar and the yen in Asia trade Tuesday. In addition to uncertainties over Greece's bailout, sentiment has been bruised on tension over cease-fire in Ukraine.
        The euro was at $1.1361 from $1.1347 late Monday in North America, after briefly hitting $1.1322. Against the yen, the common currency was at Y134.66 from Y134.57 after hitting one-week low of Y133.96.
        The Ukrainian cease-fire came under pressure Monday as fighting blazed around a contested eastern city and elsewhere. Officials said at least five Kiev soldiers had been killed since the cease-fire went into effect at midnight Saturday.
        Earlier in Asia trade, the Australian dollar jumped against the yen to as high as Y92.59 from around Y91.60 after minutes from the Reserve Bank's Feb. 3 policy meeting showed that it refrained from laying the ground work for a March cut in interest rates.
        The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was down 0.07% at 85.35.
        Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com
        (END) Dow Jones Newswires

        February 17, 2015 00:58 ET (05:58 GMT)

#FX
#Forex
#DollarTad
#AgainstYen
#JGB_Auction