TOKYO- The dollar’s surge against the yen lost steam in Asian afternoon trading on Thursday, after it hit a fresh seven-year high above 115 yen following upbeat US jobs data and a Republican sweep in US midterm elections.
In Tokyo, the greenback fell back to 114.33 yen, weakening from 114.69 yen in New York and 115.49 yen earlier Thursday, a level last seen in 2007.
“Today’s decline is a natural retreat following the (dollar’s) quick and significant moves,” said Minori Uchida, head of Tokyo global markets research at Bank of Tokyo-Mitsubishi UFJ.
“Players are trying to adjust their positions ahead of the US payroll announcement on Friday. But the overall yen-selling trend against the dollar has not changed,” he added.
The euro fetched $1.2519 against $1.2484 in New York, and 143.19 yen from 143.18 yen, ahead of a European Central Bank policy meeting on Thursday.
Data on Wednesday showed that the US private sector added slightly more jobs in October than in September, extending an upward trend, according to private payroll company ADP.
Markets will be keeping a close eye on Friday’s official US jobs report, which will give the latest snapshot of the world’s top economy and an idea about the Federal Reserve’s latest plans for interest rates — a key factor for dollar trading.
The greenback’s surge against the yen was further boosted Wednesday by the Republicans’ election victory, which raised hopes the gridlock that has paralysed Washington for years could be broken.
Analysts said the news would also boost the prospects for tax reform, a key oil pipeline and immigration reform.
Also Wednesday, Bank of Japan governor Haruhiko Kuroda vowed that it would do everything possible to beat years of deflation, after the central bank surprised markets with an expansion of its already huge monetary easing campaign last week.
Euro trading was focused on the ECB meeting later Thursday and signs of further policy measures, after the European Commission this week slashed its economic growth forecasts for the eurozone.
“We expect the ECB to strike a dovish tone at today’s meeting, possibly hinting at… adjustments or extensions to existing programmes,” Credit Agricole said.
But “we remain of the view that the ECB will keep sovereign bonds purchases as a very last resort option”, it added.
The dollar rose against other Asia-Pacific currencies.
It strengthened to Sg$1.2935 from Sg$1.2909 on Wednesday, to Tw$30.58 from Tw$30.52, to 1,088.64 South Korean won from 1,081.60 won, and to 32.79 Thai baht from 32.72 baht.
The dollar also rose to 61.41 Indian rupees from 61.38 rupees, to 45.08 Philippine pesos from 44.89 pesos, and to 12,165.30 Indonesian rupiah from 12,115.00 rupiah.
The Australian dollar fell to 85.94 US cents from 87.36 cents, following data that showed the country’s jobless rate remained stable at an almost 12-year high of 6.2 percent in October, reflecting a soft labour market as the economy adjusts away from mining-driven growth.
The Chinese yuan was stronger at 18.72 yen against 18.64 yen.