11 July 2005, 11:59  US dollar ends Asian session softer

The US dollar ended the Asian session softer than when it started it, after investors took their cue from Friday's weaker-than-expected US payrolls data to lock-in profits against the dollar. At 3.01 pm (0701 GMT) here, the euro was at 1.2019 usd, up from 1.1992 usd just over three hours earlier in Tokyo. The dollar was at 111.95 yen, up from 111.87 yen earlier in Tokyo. "With the headline payrolls data weaker than expected, the market has become marginally less concerned about the Fed rate cycle at the start of this week, thus taking the shine off the US dollar," UBS AG told its clients. US non-farm payrolls for June rose 146,000 and May-April payrolls were revised up a total of 44,000, for a package close to expectations. The median estimate in a Market News International poll of economists was for payrolls to increase by 195,000 in June. Analysts said that although Friday's report did show the US labor market was recovering and thus supports the case for further Federal Reserve interest rate hikes, some investors took the opportunity to take profit and adjust positions before more US data this week, including Wednesday's May international trade balance. While the dollar drifted lower through the Asian session, overall flows were relatively thin as Asian markets were also treading cautiously before the Bank of Japan's two-day policy meeting, which ends Wednesday. "For the Japanese yen, the opportunity to gain traction against the greenback could also surface on Wednesday, as both May current account data and the Bank of Japan's policy decision are scheduled to be announced that day," said Bank of Tokyo-Mitsubishi's Singapore economist, Wong Keng Siong.

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