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Dollar stable ahead of US bank results

Dollar stable ahead of US bank results
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First Published: Wed, Apr 16 2008. 12 37 PM IST
Updated: Wed, Apr 16 2008. 12 37 PM IST
AFP
Tokyo: The dollar was rangebound in Asian trade on Wednesday as investors nervously awaited earnings reports from major US banks to see how badly they have been hit by subprime losses.
The dollar was at 101.71 yen in Tokyo afternoon trade, almost unchanged from 101.74 late Tuesday in New York. The euro edged up to 1.5806 dollars from 1.5789 and to 160.75 yen against 160.66.
The dollar paused after gains seen in US trade on the back of speculation that the Federal Reserve might tone down its aggressive monetary policy easing in light of stubborn inflationary pressures.
The US government reported that its producer price index (PPI) jumped a much stronger-than-expected 1.1% in March, the biggest gain since November.
“The PPI was strong, with inflation pressure rising. The credit crunch seems to have peaked out, but the direction in the market still remains unclear,” said Saburo Matsumoto, chief forex strategist at Sumitomo Trust Bank.
“The Federal Reserve will surely slash key interest rates later this month, but the cutting range will be limited,” Matsumoto said. “The market environment is against selling the dollar.”
“I think investors are ready to start buying the dollar, but they first have to make sure the health of the US economy and major financial institutions before making moves,” he said.
Wall Street giants JPMorgan Chase, Citigroup and Merrill Lynch are scheduled to release their earnings this week.
“Investors seem eager to examine the health of the US economy by looking at the (banking results for the) January-March quarter,” said Masatsugu Miyata, forex dealer at Hachijuni Bank.
Traders will look for fresh leads in the Federal Reserve’s Beige Book economic report due out on Wednesday, amid growing gloom over the outlook for the world’s largest economy. The US inflation rate for March is also to be released later Wednesday.
“We are in a somewhat grey area as to whether or not the current stance of Fed policy is sufficient to cushion the impact of an extremely sluggish growth environment without excessively fuelling expectations of less stable prices,” said Thomas Lam, senior treasury economist at United Overseas Bank.
“The strained conditions in credit markets are also problematic for the Fed,” he said.
Against regional currencies, the dollar fell to 1.3559 Singapore dollars in late Asian trade from 1.3563 a day earlier, to 30.25 Taiwan dollars from 30.27 and to 31.52 Thai baht from 31.54.
It edged up to 9,195 Indonesian rupiah from 9,190 to 989.2 South Korean won from 985.7 and to 41.85 Philippine pesos from 41.77.
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First Published: Wed, Apr 16 2008. 12 37 PM IST
More Topics: Forex | Asia | US | Subprime | Dollar |