Yen slips on Nikkei, dollar soft after U.S. data
TOKYO, Aug 25 - The yen dipped slightly on Thursday on a fall in Japanese share prices, while surprise weakness in U.S. durable goods orders data previous day kept the dollar on the defensive against other currencies.Strong demand for yen to buy Japanese shares has been a key support for the currency in the past few weeks. Japanese data showed foreign investors bought a net 447.7 billion yen ($4.06 billion) of Japanese stocks last week, helping the Nikkei share average to four-year highs.But the Nikkei slipped about 0.4 percent on Thursday, putting currency market players on their guard.
“The market is still watching to see how many Japanese shares foreign investors will buy,” said Kikuko Takeda, market economist at Bank of Tokyo-Mitsubishi.
As of 0045 GMT, the dollar fetched 110.35 yen, up from around 110.20 yen in late U.S. trade. The euro firmed to 135.45 yen from around 135.25 yen.
The European currency changed hands at around $1.2275, flat from late U.S. levels and hovering near its highest level this week.
The euro had gained on Wednesday after data showed orders for U.S. durable goods tumbled 4.9 percent in July, the biggest drop in more than a year-and-a-half and below economists’ forecast of a 1.2 percent drop.
The currency has been helped by surprise upswings in euro zone economic sentiment of late. Germany’s ZEW investor confidence indicator on Tuesday rose to a 17-month high.
That augured well for Germany’s Ifo business sentiment survey due at 0800 GMT. Economists expect its business climate index to rise to 95.2 in August from a five-month high of 95.0 in July, but the ZEW data might have boosted market expectations further.
The market showed no response to data showing a fall in Japan’s trade surplus in July. It narrowed 22.6 percent from a year ago to 873.6 billion yen, a slightly smaller decline than economists had forecast.
Some traders said the dollar was hurt after U.S. rating firm Moody’s downgraded its ratings on Ford (F.N: Quote, Profile, Research) and General Motors (GM.N: Quote, Profile, Research) to junk status late on Wednesday.
Ford and GM are among the biggest issuers of corporate debt in the United States, with well over $400 billion of combined debt as of June, so downgrade could sap foreign investors’ appetite for U.S. corporate bonds.
But others said the impact would be negligible because the cuts were no surprise as two other rating firms, Standard & Poor’s and Fitch, had already downgraded the automakers’ debt.
“It’s unlikely to cause a huge shock like the one we saw earlier this year,” said Masayuki Kichikawa, senior economist at Mizuho Securities. But he added: “We need to see the reaction of U.S. corporate debt market in the next few days.”
Comments from Chicago Federal Reserve Bank President Michael Moskow did not cause any market reaction.
In a speech on Wednesday in Chicago, Moskow said the United States needs higher interest rates to keep inflation down as the job market tightens and energy prices stay high.
Moskow, a voting member of the Fed’s policy meeting this year, also said core inflation is at the upper end of a level consistent with price stability.
Written by admin on August 25th, 2005 with
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