U.S. Dollar Rises against Japanese Yen as Markets Await Key U.S. Data

By: Barbara Zigah

The U.S. Dollar edged up versus the Japanese Yen as investors attempted to buttress their long term U.S. Dollar holdings with the low priced currency. As reported at 2:50 p.m. (JST), the U.S. Dollar was trading against the Japanese currency at 88.58 Yen, slightly higher than the 88.54 Yen traded in New York yesterday. Dealers said that because short term hedge fund operators are staying out of the market until the release of key economic data from the U.S., even these smaller buys are impacting the currency markets. Some market players are warning that if the U.S. data comes back worse than anticipated, it will have a detrimental effect on the U.S. Dollar as Treasury yields would be lower. Recently, the yield on the 10-year Treasury Note was less than 3%, the lowest point in more than a year, while the 2-year Treasury Bill yield struck close to an all-time low at 0.601%. One senior FX dealer in Tokyo recommends that market players sell their U.S. Dollar holdings if the yields on U.S. Treasuries fall further. Many investors believe that poor economic data will easily push the U.S. unit lower to 85.00 Yen.

Japanese retail investors also helped to push the common currency Euro up against the U.S. Dollar and the Japanese Yen, trading at $1.2220 and 108.25 Yen. However, the outlook for the Euro remains bleak, and one dealer commented that there is a chance that the Euro may slip to an 8½ year low against the Japanese Yen later today, if the generalized weakness in the equity markets continues.