13 April 2001, 11:15 Asia FX Review: USD/JPY, EUR/JPY up on Japanese buying
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.
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