TOKYO- The dollar edged up in Asia Tuesday, after big gains in New York as a Federal Reserve official hinted that the US central bank could announce a winding down of its stimulus programme as early as next week.
The greenback turned up to 103.30 yen in afternoon trading, against 103.28 yen in New York and well up from the levels around 103 yen earlier Monday in Tokyo.
The euro gained to $1.3756 from $1.3737 while it also rose to 142.08 yen from 141.89 yen in US trading.
On Monday, James Bullard, the president of the Fed’s St. Louis branch, said in a speech that “a small taper” of the $85 billion a month asset-purchase programme might be a possibility as policymakers wrestle with how to respond to signs of improvement in the world’s biggest economy.
A strong third-quarter growth report and surprisingly upbeat November jobs data last week boosted speculation the Fed may start reeling in the scheme after a policy meeting that ends next Wednesday.
The US unit has been rising for weeks on expectations of a pullback, which would reduce the number of dollars in the financial system, boosting demand.
“Markets are becoming increasingly accustomed to the idea of an imminent Fed tapering as reflected in ongoing gains in risk assets,” Credit Agricole said, adding that Fed officials’ comments have “on balance supported the view of beginning tapering sooner rather than later”.
Strong Chinese economic data has helped boost confidence among investors who are looking to Thursday’s US retail sales report for November.
The yen has been under pressure after weak Japanese growth data on Monday boosted expectations that the Bank of Japan will launch another round of monetary easing to prop up the economy.
The euro has been notching up gains after the European Central Bank last week held off any new interest rate cuts despite prolonged low inflation.
That followed the ECB’s surprise cut last month of its central refinancing rate by a quarter-point to counter the threat of deflation.
“The euro has gained a reputation as an unsellable currency, with the currency continuing to hold its ‘Teflon’ coating,” Credit Agricole said.
However, it said an easier monetary policy at the ECB and soft economic growth compared with the United States suggested there would be some depreciation in the euro.
The dollar was mixed against other Asia-Pacific currencies.
It weakened to 32.10 Thai baht from 32.14 baht the previous day, to 1,052.60 South Korean won from 1,053.35 won, and to Sg$1.2494 from Sg$1.2510.
The greenback strengthened to 61.22 Indian rupees from 61.04 rupees, to 11,990 Indonesian rupiah from 11,980 rupiah, to 44.29 Philippines pesos from 43.97 pesos, and to Tw$29.56 from Tw$29.55.
The Australian dollar was unchanged at 91.07 US cents, while the Chinese yuan bought 17.01 yen from 16.93 yen.