27 September 2001, 17:14 The dollar was trading firmer against the yen
NEW YORK (MktNews) - The dollar was trading firmer against the yen
and euro in morning action Thursday with most strength seen against the
yen following another overnight bout of intervention.
Dollar-yen was trading around Y119.39 at 8:54 a.m., up from Y119.10
posted early in the New York session and a full 1 1/2 yen higher than
the closing level in New York Wednesday.
Traders said another aggressive bout of intervention by Japan's
central bank was largely responsible for the dollar's better showing.
Overnight, in Tokyo trade, the Bank of Japan intervened to buy
dollars, starting at around Y117.50, traders said, and driving the pair
higher and tripping stop-loss dollar buy orders in the market.
The BOJ's action was then joined by European central banks early in
the continental trading day buying euros for yen at the behest of the
BOJ and providing a further dollar boost.
Traders say that the intervention by the BOJ, the latest in a
series of interventions this week, started at a higher level than other
such actions, possibly catching players off guard but nonetheless
underscoring the seriousness with which the BOJ regards its mission.
Japanese exporters and other companies, already struggling because
of a slowing global economy, would be hit hard by an overly strong yen
and the central bank and the Ministry of Finance have warned that they
will take steps to counter an overly strong currency. Traders now
speculate that the BOJ may be intending to weaken the yen to about 120
to the dollar in time for the close of the fiscal half-year on Friday.
The dollar was trading around Y126 at the end of the fiscal year in
March and around Y120 as recently as mid-August. Since then the yen has
strengthened, against the BOJ's wishes, and traders have speculated that
Japanese accounts may have been buying yen to repatriate back to Japan
in order to repair shaky balance sheets ahead of the fiscal half-year
when new accounting requirements come into effect.
Traders say that dollar sell orders were filled at various levels
on the way up to Y119.00 and that some additional selling interest
remains in place around Y119.60/70.
Meantime the dollar rose more modestly against the euro, trading to
around $0.9195 at 8:54 a.m. EDT with the euro only about a half a cent
weaker than its Wednesday New York close.
Modest euro selling was seen during European hours and into the
early U.S. trading day but activity in the pair was mostly slow, traders
say.
Euro-dollar buyers are said to lie in wait around the overnight low
in the pair at $0.9170/75 but stop-loss sell orders could be tripped on
a move below there.
The euro remained a little on the soft side in morning trade
despite the decision by the European Central Bank to leave rates on hold
at its regular fortnightly meeting, a decision that was expected.
And markets showed little reaction to the release of data on U.S.
Durable Goods where the Commerce Department reported that orders fell by
0.3% in August, about as expected.
While the data is useful to analysts to gain a sense of economic
performance in the U.S. many now prefer to look at data compiled in the
wake of the September 11 attacks to gain a more current look at the
state of the economy.
In that light, traders will cast an eye to the release of August
new home sales, due for release at 10:00 EDT, but will likely attach
only limited importance to the information.
New Home Sales are expected to fall to a 920,000 annual rate, down
slightly from the 950,000 pace seen in July.
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