Dollar Up Against Yen Amid Nikkei Gains, Dip Buying

 
   By Hiroyuki Kachi 
 

        The dollar was higher against the yen Wednesday, as a solid Tokyo stock market and dip buying sent the greenback back to around where it was before yesterday's rally.
        Around 0450 GMT, the dollar climbed to Y121.43 after falling as low as Y120.85 midmorning. That compared with Y121.14 late Tuesday in New York.
        The greenback lost a good part of its gains overnight following a decline in U.S. stocks and comments by a U.S. government official.
        The Dow Jones Industrial Average dropped 1.85%. Meanwhile, White House chief economist Jason Furman on Tuesday the stronger dollar is acting as a headwind for the U.S. economy, and the global slowdown remains a risk.
        During Asian trade hours, the dollar regained momentum as investors, some of them likely Japanese retail investors, bought on dips after the Nikkei Stock Average gained ground, said a senior Japanese bank trader.
        The benchmark Nikkei Stock Average maintained its early gains and was up 0.8% midday.
        "But this is dangerous," says the dealer, noting that while Tokyo shares advanced today despite a fall in the Wall Street overnight, it wouldn't be a surprise to see another tumble in the U.S. later today.
        He said a resurgence of negative factors such as stock and oil price weakness and Greek bailout fears, could ultimately drag the pair downward as was seen in December after the pair reached a seven-year high of Y121.86.
        "Basically, the dollar remains trapped in a range between Y120 and Y122," said Toshihiko Sakai, senior manager of forex and financial products trading division at Mitsubishi UFJ Trust and Banking Corp.
        With an absence of incentives to lure the yen selling from Japan side, I think it's just a matter of whether the dollar will act as a driver or not," said Mr. Sakai. Although the dollar is staying at an extremely high level, the rangebound trade will likely persist, he said.
        The euro was at $1.0676 from $1.0698, while the common currency was at Y129.66 from Y129.57.
        The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was down 0.19% at 88.66.
        Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com
        (END) Dow Jones Newswires

        March 11, 2015 01:13 ET (05:13 GMT)

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