Dollar Tad Higher Against Yen With Lack of Fresh Cues

 
   By Hiroyuki Kachi 
 

        The dollar was a tad higher against the yen in directionless Asia trade Tuesday, with investors avoiding making major moves amid a lack of fresh trading cues to give the greenback a lift.
        Around 0450 GMT, the dollar was at Y120.17, compared with Y120.07 late Monday in New York.
        The greenback remained firm against the Japanese currency on the back of higher U.S. Treasury yields. But after touching as high as Y120.20 midday, the U.S. currency found itself top heavy, due to a lack of fresh cues strong enough to drive the currency higher to trounce offers placed upside or selling on recovery.
        U.S. Treasury bonds tumbled Monday after a two-day price rally, sending the yield on the benchmark 10-year note to its highest closing level since December.
        "The gain in the long-tem note can largely be ascribed to caution ahead of the planned $64 billion-sale of new Treasury debt starting today," said Takuya Kanda, senior research at Gaitame.Com Research Institute.
        "The U.S. bond yields may gain again but we need to take it with a grain of salt," as a driving force to support a higher dollar, said Mr. Kanda. "It doesn't mean heightening expectations for a rate increase," he said.
        Mr. Kanda said investors are shifting their focus to U.S. retail sales and other economic indicator later this week.
        But Osamu Takashima, chief FX strategist at Citigroup Global Markets Japan, said in a morning note that the dollar will encounter selling pressure resulting from the rise in eurozone bond yields. An uptick in eurozone yields especially in Germany will like cause a falloff in the dollar, or lift the euro, causing downward pressure on the dollar against the yen for some time.
        In addition, possible higher 10-year and 30-year yields in France, Italy and Spain may also attract more interest from Japanese institutional investors, luring their cash away from unhedged investments in U.S. Treasury bonds, and resulting in thinner bids for the dollar buying against the yen.
        "The dollar remains firm against the yen but we continue to remain cautious about downside risks," Mr. Takashima said.
        Amid concerns about the Greek bailout, the euro was at $1.1166 from $1.1154, while the common currency was at Y134.15 from Y133.98.
        Germany's finance minister said Monday a referendum on its international bailout program may be a good idea for Greece, underlining doubts among Greece's creditors about the government's ability to agree on divisive overhauls without endorsement by voters.
        The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was down 0.09% at 85.46.
        Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com
        (END) Dow Jones Newswires

        May 12, 2015 01:12 ET (05:12 GMT)

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