Dollar Resilient in Asia With Fed Seen on Track to Raise Rates

 
   By Tatsuo Ito 
 

        The dollar was a tad higher against major rivals in Asia on Thursday, with traders more confident that the U.S. central bank is on track to raise rates later this year.
        "Dollar buying is going on, particularly against the euro, as market participants feel they don't have to be excessively dovish about the timing of a U.S. rate increase," said Yuji Saito, executive director of foreign exchange at Crédit Agricole Corporate & Investment Bank.
        On Wednesday in New York, the dollar gained moderately after minutes from the Federal Reserve's most recent policy meeting fueled expectations for an early increase in U.S. interest rates. The minutes said several officials thought June would be the right time to raise rates, while others thought it would be better to wait longer.
        "The market consensus remains the same, in September, though there's a small possibility of June depending on U.S. economic data," he added.
        As of 0450 GMT, the dollar was at Y120.26 from Y120.15 late Wednesday in New York. The euro softened to $1.0770 against $1.0781.
        The dollar's rebound overnight followed a fall Wednesday after comments by BOJ Gov. Haruhiko Kuroda suggested further easing action by the Japanese central bank later in the month was unlikely. Mr. Kuroda said the risks the BOJ saw in late October when it took additional action have disappeared.
        Yunosuke Ikeda, head of FX strategy at Nomura Securities, said: "It's fair to say this comment effectively denies the possibility of early action".
        He added that the BOJ doesn't need to generate a "surprise" for markets because Tokyo share prices have recently performed strongly. The benchmark Nikkei Stock Average is within reach of the 20,000 mark Thursday. It was up 0.65% at 19919.
        Traders say a rise in the value of Japanese investors' stock holdings may offer more leeway for them to take more risk by putting cash outside Japan, keeping the underlying weakness in the yen intact.
        Weekly data released by the finance ministry Thursday showed that Japanese investors' appetite for investment in overseas stocks remains solid, a factor that could support a "weak yen" trend, says Junya Tanase, chief currency strategist at JP Morgan Chase in Tokyo.
        Japanese investors bought a net Y424.4 billion of overseas equities and investment funds from March 29 to April 4, up from Y396.1 billion in the previous week.
        The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.04% at 87.36.
        Write to Tatsuo Ito at tatsuo.ito@wsj.com
        (END) Dow Jones Newswires

        April 09, 2015 01:29 ET (05:29 GMT)

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