US dollar soft as hopes for mid-year rate hike fade

The China Post - - BUSINESS INDEX & -

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.

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