By Masataka Nakamura
Tokyo, April 13 (BridgeNews) - The U.S. dollar and the euro rose against the yen Friday, helped by good dollar demand from Japanese players. Stop-loss buying put extra upward pressure on the dollar/yen. However, the price movement was exaggerated due to illiquid market conditions with the U.S. as well as many Asian and European markets closed for Easter.
* * * Asian Close NY Close Previous Asian Close Asian Range
(1500 JT) (1500ET) (1500 JT) (1500 JT)
USD/JPY 124.20 123.55 124.11 123.70--124.38
EUR/USD 0.8923 0.8938 0.8885 0.8916--0.8935
EUR/JPY 110.79 110.45 110.27 110.33--110.96
* * *
Dollar/yen firmed slightly Friday morning on Japanese corporate demand. In addition, dollar/yen demand through the Tokyo fixing also supported the U.S.
unit. Stop loss dollar/yen buying was also triggered above the 123.80, putting upward pressure on dollar/yen. The topside was initially limited due to selling interest near 124.00.
Later in the morning session, Japanese investment accounts bought up the euro/yen, which pushed the dollar/yen up, with another trigger of stops above 124.00. The price action was exaggerated due to thin market conditions on Easter. Meanwhile, trading fizzled out soon, after the buying had settled.
Hideyuki Tsukamoto, manager of the forex department at Fuji Bank said that there is still good overall demand of dollar/yen when it weakens.
In the afternoon session, dollar/yen moved higher, led by the buying from U.S. investment banks, with a trigger of stops at 124.30. The dollar/yen rose to a high of 124.35. However trading was soon subdued, after the stop trigger.
Overall, liquidity was lower than usual because many markets throughout the region were closed for the Easter holiday. Hideyuki Tsukamoto, manager of forex department at Fuji Bank said that the overall market was exaggerated by thin market conditions.
Euro/dollar edged higher on euro/yen buying by Japanese players, but the market was capped around 0.8940 and the upward momentum fizzled soon. With most European and U.S. markets closed, few players were willing to act aggressively.
Steady trading is expected for the rest of the Asian session. For euro/yen, the dollar/yen was well capped around the 111.00 area Australian dollar/U.S. dollar trading was extremely thin, because the Australian market was closed due to Easter.
Comments by Japanese officials failed to inspire the market today, while they did not provide any new stimulus for the market.
Taro Aso, Japan's state minister for economic and fiscal policy, said the Japanese economy might enter a downturn in several months. Aso also said it would take several months to judge whether the economy is in a deflationary spiral. As for monetary policy, Aso said it remains questionable whether quantitative easing has started to affect the economy. Aso also said an extra budget should be considered on a possible fall in fiscal 2001-02 (April-March) GDP.
Liberal Democratic Party policy chief and prime ministerial hopeful Shizuka Kamei is urging the government to move faster on economic steps, Finance Minister Kiichi Miyazawa said.
Japan's Cabinet Office downgraded its assessment on the overall economy for the third straight month in April's report, the Cabinet Office announced Friday. It was the first time since the period between July and September 1998 it had done so for a full quarter.
The office said the "economy shows weakness" in the April report, compared with the March view that "improvement of the economy is stalling." It attributed the downgrading to worsening in industrial output and corporate figures. The report had little impact on the currency market as a downward assessment had been widely expected.
Bank of Japan related news also failed to inspire the market. Bank of Japan Governor Masaru Hayami said fund demand is still weak and the BOJ will monitor the impact of its current easing, according to the Cabinet Office.
The Bank of Japan decided to keep its monetary policy unchanged in Friday's council meeting. The BOJ is still monitoring the impact of the latest monetary easing. The decision Friday to maintain current monetary policy Friday is in line with market expectations. Hence, the impact on the markets was fairly limited.
The outstanding debts of Japanese bankruptcies totaled 2.367 trillion yen in March, up 265.9% on year, Teikoku Databank Ltd. announced Friday. However, the number of companies that went under in March fell to 1703 from 1770 a year earlier, according to Teikoku.