USD Up against JPY as Long-Term Investors Foresee Possible Rate Hike

By: Barbara Zigah

In Asian trading today, the U.S. Dollar gained versus the Japanese Yen with long-term investors buying the U.S. currency based on speculation that interest rates in the United States will rise within the next year while Japanese rates remain unchanged. Nonetheless, many dealers do expect that, in the short term, the greenback will fall later this week following the release of U.S. economic data including consumer spending and non-farms payroll data.   As reported at 2:47 p.m. (JST) in Tokyo, the U.S. Dollar was trading against the Yen at 89.44 Yen, a slight gain from Friday’s late trade of 89.26 Yen in the New York market. The U.S. Dollar Index, a measure of the greenback’s performance versus other major currencies, traded at 85.328 .DXY; last Friday in New York it traded at 85.270 .DXY.

This past weekend’s G20 summit in Canada resulted in several of the G-20 nations pledging to halve their respective country’s deficit within the next three years. Japan was a notable exception to that pledge; Japan’s debt burden is considered quite substantial and the 50% reduction milestone may be unreachable within that time frame. The G-20 pledge is also playing against the U.S. Dollar; as one senior manager in Japan put it, should the American economy weaken, government administration will have limited power to revive it.