6 June 2001, 11:24 Asia FX Review: JPY offered against USD and EUR by US names
By Masataka Nakamura
Tokyo, June 6 (BridgeNews) - Dollar/yen and euro/yen moved higher
Wednesday led by relentless buying from U.S. names. In addition,
aggressive Australian dollar buying against the yen after the stronger
than expected Australian first quarter GDP data put extra downside
pressures on the yen.
Furthermore, Standard and Poor's negative assessment about Japanese banks
undermined the tone for the yen. However, profit taking selling pressures
above the 120.50 area checked the upward momentum of dollar/yen.
* * *
After hovering in a narrow range, dollar/yen rose from 120.20 to
120.48 later in the morning, led by aggressive Australian dollar/yen
buying after the strong GDP data for Q1. Q1 GDP came in at 1.1% on quarter
and 2.1% on year, compared with expectations of 0.5% and 1.4%
respectively.
Relatively heavy selling was conducted around the 120.30 area, but the
selling was soon absorbed by aggressive buying from U.S. names.
Stop loss buying of dollar/yen was triggered at 120.50, underpinning
the dollar/yen. U.S. names kept heavy buyers of dollar/yen and euro/yen in
Wednesday's session, which was bolstering the pair. Inter-bank players
sold dollar/yen after trigger of stops at 120.50 for profit taking.
This, coupled with the selling from exporters, weighed down on the
dollar/yen through the end of the morning session.
Later in the session, dollar/yen rose again, after S&P released the
statement that the slide in ratings on Japanese banks is inevitable.
Euro/yen buying from U.S. names bolstered dollar/yen too. Dealers also
pointed out that the yen also came under pressure as the Nikkei 225 stock
index moved into a negative territory later in the afternoon.
Standard & Poor's said the slide in ratings on Japanese banks is not
irreversible, although, amid the current tough operating environment,
strong measures are required for the banks to regain their credit
strength. According to Standard & Poor's Bank Industry Risk Analysis for
Japan published today, the financial sector's weak fundamentals have
failed to improve, as shown by the recently announced financial results
for fiscal 2000 (ended March 2001).
Japanese shares closed Wednesday slightly lower, reversing earlier
gains led by a rally in U.S. stocks overnight, as nervousness ahead of the
upcoming special quotation fixing for June futures and options contract on
Friday weighed on the market. Prolonged concerns over high tech-earnings
also limited gains. The Nikkei 225 Stock Average fell 0.1%, or 7.16
points, to 13,174.84.
Earlier, there was a report that Minister of Finance Masajyuro
Shiokawa said that he would like to see dollar/yen at 121.00. The comment
aroused some interest among dealers, but dealers we contacted mentioned
that it did not lead to price action in the dollar/yen. Later MOF Shiokawa
denied having said that he wants dollar/yen at 121.
Dealers say MOF Minister Shiokawa's personal opinion on the JPY has
had o little impact, as they believe Japan's foreign exchange policy is
crafted by the international bureau at the MOF and Shiokawa is merely a
spokesman. They also pointed out that Shiokawa lacks international finance
or foreign exchange expertise. There is also some speculation the MOF may
have directed Shiokawa to deny the remark that he would like to see
USD/JPY at 121.00. BridgeNews has a report ( .10567 ).
Euro/dollar dipped to 0.8514 after failing to break Tuesday's high of
0.8549. Dealers said the market was a bit long, but 0.8510 was expected to
hold.
Momentum players took some profit at 0.8545 and Swiss names were buying
dollar/Swiss Franc.
Dollar/Swiss Franc bounced from 1.7760 to 1.7809, helped by the buying
from
Swiss names. Cable stalled in the 1.4120-40 area.
Euro/dollar and dollar/Swiss Franc were stable to firmer during the
Asian afternoon session. Eur0/dollar was supported by euro/yen buying from
U.S. names, but profit taking selling checked the upward movement near the
0.8550 area.
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