Tokyo: The dollar was rangebound in Asian trade on Thursday, 27 September, hovering close to record lows against the euro as the market awaited fresh trading incentives from an upcoming batch of economic data, dealers said.
They said the market was jittery ahead of final US second-quarter growth figures and new-home sales due out later in the day amid speculation about the chances of further US interest rate cuts.
The dollar slipped to 115.40 yen in Tokyo morning trade from 115.57 in New York late on Wednesday.
The euro rose to $1.4135 from $1.4125 in late US deals, remaining close to Wednesday’s all-time high of $1.4162. The single European currency eased to 163.15 yen from 163.23.
The dollar was likely to remain in a narrow range against the yen for the rest of this week ahead of the end of the first half of Japan’s financial year, said Saburo Matsumoto, Sumitomo Trust Bank’s chief foreign exchange strategist.
He said fears of a credit crunch were easing somewhat following recent market volatility sparked by rising defaults in subprime mortgages to Americans with patchy credit histories.
“We see dealers feel more relaxed about the problem now,” Matsumoto said.
“But it may take some more time before carry trade starts again,” he added, referring to the practice of borrowing cheap credit in countries such as Japan to invest in high-yielding assets and currencies elsewhere.
Dealers said that the market was cautious ahead of the Bank of Japan’s closely watched Tankan survey of business sentiment due Monday.
“The yen will not move before (traders) see the Tankan figures,” said HSBC currency expert Kosuke Hanao.
There are concerns about the outlook for Japanese corporate capital spending, which has been one of the key drivers of the broader recovery until now, after a drop in the second quarter caused the overall economy to contract.
Dealers in Tokyo also continued to monitor domestic politics as polls showed the new government enjoying strong approval ratings after taking office, although there was little impact on the yen, dealers said.
“The government still faces difficulties as the upper house is controlled by the opposition party,” Matsumoto at Sumitomo Trust said.