Forex - US dollar slips in Singapore afternoon trade on Japan's likely rate hike |
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Published
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Tue, 16 Jan 2007 09:17
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SINGAPORE (XFN-ASIA) - The US dollar weakened in afternoon trading here as the yen continued to rise on heightened expectations that the Bank of Japan will raise interest rates this week despite signs of opposition from the Japanese government, dealers said.At 3.38 pm here (0738 GMT), the dollar was at 120.32 yen, down from 120.46 yen in Sydney just over 3-1/2 hours earlier. The euro was at 1.2958 usd, up from 1.2933 usd in Sydney.The Bank of Japan begins tomorrow a two-day meeting of its policy board, and it is expected to raise interest rates despite indications that the Japanese government opposes an increase, dealers said.One dealer said: 'The futures markets are now pricing in an 80 pct chance of a rate hike.'National Australia Bank said in a forex market note: 'Apart from triggering fresh concerns about Bank of Japan independence, the jawboning from the Japanese government suggests that an interest rate hike will be hard won by central bank head [Toshihiko] Fukui.'But United Overseas Bank said: 'Pricing action affirms our view that even if [the] Bank of Japan ignores political pressure, pressing ahead with a tightening move this Thursday, Bank of Japan interest rates at 0.5 pct remain low compared to higher-yielding currencies, thus keeping the yen attractive as a funding vehicle for carry trades.'The dollar also weakened against the euro in afternoon trading here, although there was not much activity, dealers said.They said overall sentiment toward the euro was cautious as the market awaited the release later today of the results of the German ZEW survey of economic sentiment for this month. The market consensus is that the ZEW index will have risen to minus 10 points from minus 19 last month, dealers said.Later on, the New York Federal Reserve Empire State manufacturing index for this month is due to be released. The market expects it to have fallen to 20.0 after a decline to 23.13 last month, dealers said.Singapore 3.38 pm (0738 GMT) vs Sydney 2.05 pm (0305 GMT)US dollaryen 120.32 down from 120.46sfr 1.2464 down from 1.2483Eurousd 1.2958 up from 1.2933yen 155.92 up from 155.81 yensfr 1.6154 up from 1.6145stg 0.6586 up from 0.6585Sterlingusd 1.9671 up from 1.9642yen 236.68 up from 236.60sfr 2.4517 down from 2.4519Australian dollarusd 0.7830 up from 0.7828stg 0.3979 down from 0.3985yen 94.21 down from 94.255singapore@xfn.com
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Forex - US dollar weaker vs yen, euro in Singapore afternoon trade 