Dollar lower in Asia after upbeat data, Beige Book


TOKYO- The dollar drifted lower in Asia Thursday as upbeat US data and dovish comments from Federal Reserve chair Janet Yellen suggested the central bank would hold steady on the pace of its stimulus tapering.

In Tokyo midday trade, the greenback slipped to 101.99 yen from 102.25 yen in New York on Wednesday.

The euro rose to $1.3841 from $1.3815, while it weakened to 141.16 yen from 141.28 yen.

A pair of official reports for March, on home construction and industrial output, lifted sentiment while the Fed said in its Beige Book report that the US economy was showing clear signs of picking up again after being caught by a severe winter freeze.

“Economic activity increased in most regions” of the country since the early March report, it said, with “modest or moderate” expansion in most of the Fed regions surveyed.

The report will be used in the bank’s next policy meeting on April 29-30, where policy makers will decide what to do with its multi-billion-dollar stimulus programme. The Fed has been reeling in the scheme as the world’s biggest economy slowly recovers.

Separately, Fed boss Janet Yellen said it still believed there was a need to keep ultra-low rates well into next year and saw no threat from inflation.

“Yellen’s overnight speech again reassured markets that the federal funds rate will remain low until an economic recovery is assured,” National Bank said, adding that her comments were “all very dovish”.

The yen has enjoyed support since last week when the Bank of Japan stood pat on further monetary easing.

“The yen has been supported, mainly on the back of stabilising BoJ monetary policy expectations,” Credit Agricole said.

“According to the central bank, growth and inflation have been developing in line with market expectations. This suggests that there is little room of the BoJ becoming more aggressive anytime soon.

“This is especially true as central bank governor (Haruhiko) Kuroda just recently stressed that the current policy stance is having the intended impact.”

Investors were also keeping an eye on tensions in the Ukraine ahead of the Easter holiday weekend.

“Going forward today markets will likely be quiet ahead of the long Easter weekend and investors will be watching for any development on the geopolitical front with the West and Russia scheduled to talk on the Ukraine situation,” Credit Agricole said.

SOURCE: AFP

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