Dollar steady in Asia ahead of jobs data

TOKYO- The dollar held steady in Asia Tuesday as investors await the release of US jobs data later in the week, while they largely ignored a Bank of Japan survey that showed business confidence at a more than six-year high.

In midday Tokyo trade, the dollar crept up to 103.29 yen from 103.22 yen in New York on Monday.

The euro bought $1.3771 and 142.23 yen, compared with $1.3772 and 142.15 yen.

The BoJ Tankan survey for January-March hit its highest level since December 2007, pointing to a pick-up in confidence in corporate Japan along with the economy.

However, it pointed to tepid investment among major firms and slumping sentiment for the April-June quarter, suggesting fears about the impact of a sales tax rise that came into effect on Tuesday.

“Firms are cautious about the future course of the economy as the impact of the tax hike remains uncertain,” said Hideki Matsumura, an analyst at Tokyo’s Japan Research Institute.

There are fears the tax rise will hit consumer spending and derail Japan’s recovery.

Yosuke Hosokawa, head of forex sales at Sumitomo Mitsui Trust Bank, said: “The Tankan results were within our market expectations and did not affect Forex exchange trading.

“The focus has already move to US unemployment figures to be released (Friday). In the long-run, dollar-buying sentiment is likely to be supported as US interest rates are on course to rise.”

US Federal Reserve chief Janet Yellen indicated last month the bank may raise its ultra-low interest rates early next year after winding up its asset-purchase stimulus.

But on Monday she sought to soothe worries about a hike in borrowing costs too soon by saying unemployment was still a big challenge for the economy and the Fed will continue with extraordinary monetary easing measures until the jobless rate falls significantly.

The European Central Bank will meet on Thursday for its next policy meeting, days after data showed eurozone inflation fell to 0.5 percent in March, the lowest rate since October 2009 at the height of the financial crisis.

The bloc’s inflation rate has trended steadily lower in recent months, coming in well below the ECB’s target rate of just under 2.0 percent, fueling concerns of deflation.