US dollar soft as hopes for mid-year rate hike fade
The yen extended its gains on Monday after a batch of weak U.S. data fueled more doubts about a mid-year interest rate hike.
In Tokyo the greenback slipped to 118.92 yen, from 118.99 yen in New York and well off the 119.56 yen earlier Friday in Asia.
The euro was at US$1.0857 and 129.12 yen against US$1.0873 and 129.38 yen in U.S. trade, as investors look for any signs of progress in Greece’s bailout talks.
On Friday, a U.S. government report on durable goods orders raised new questions about the Federal Reserve’s planned interest rate increase.
While the headline number rose 4.0 percent in March, that was driven by jumps in civilian and military aircraft as well as autos; without them orders fell 0.2 percent.
The Fed’s policy committee meets Tuesday and Wednesday. The U.S. central bank has said any increase in interest rates, which some expect as early as June, would be data-dependent.
Also this week, the Bank of Japan ( BOJ) holds a one- day meeting but policymakers are expected to stand pat on fresh measures, despite signs of weakness in the world’s number three economy.
“Speculative positions show waning appetite for shorting the yen — the probability of further BOJ easing this week is low,” Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow, wrote in a client note.
“Expectations for firm firstquarter U.S. growth are fading and the Fed may soften its tone on economic activity, raising the likelihood that rates will be hiked later in the year. The dollar will face downward pressure for a while.”
The U. S. dollar was mixed against other Asia-Pacific currencies.
It strengthened to 32.61 Thai baht from 32.49 baht Friday, to 12,957.10 Indonesian rupiah from 12,942.50 rupiah, to 63.62 Indian rupees from 63.38 rupees, and to 44.25 Philippine pesos from 44.24 pesos.
But it weakened to 1,074.05 South Korean won from 1,080.35 won, and to SG$ 1.3320 from SG$1.3405.
The Australian dollar rose to 78.18 U.S. cents from 77.55 cents, while the Chinese yuan eased to 19.18 yen from 19.29 yen.