Dollar firms up as investors look ahead to U. S.-Japan summit
Nervousness before Japanese Prime Minister Shinzo Abe’s meeting with U. S. President Donald Trump in Washington on Friday was keeping a lid on the yen’s strength.
The dollar’s rebound in mid-morning trade in Asia is ascribed to dip buying from Japanese corporate players including importers for their commercial trade settlements.
Still, investors are cautious about buying the dollar due to uncertain fiscal policy in the U. S. and signs that wages there aren’t rising as fast as many had expected, said Marito Ueda, director at FX Prime by GMO.
Investors are also shying away from buying the euro given potential political risks related to the French presidential election, he said. “That makes investors inevitable to buy the yen,” said Mr. Ueda.
There is also nervousness before Japanese Prime Minister Shinzo Abe’s meeting with U. S. President Donald Trump in Washington on Friday. Many are closely watching the U. S.-Japan summit especially after Trump unnerved Tokyo officials by accusing Japan of having unfairly influenced financial markets and the yen to help its exporters beat U. S. companies.
The dollar has been hovering in the ¥111 and ¥112 range recently, but is “unlikely to fall to ¥110 unless [there’s] clear and convincing signs of risk-off incentives,” said Nomura Securities chief FX strategist Yunosuke Ikeda.
Ikeda expects no jawboning–which could fuel a dollar bounce on Monday — and said the dollar will likely be well-supported around the technical chart line of ¥111.39.
Currency watchers are closely monitoring results from a 30-year Japanese government bond auction during Tokyo’s lunch break. The Japanese yen remained highly volatile against its rival currencies Friday last week, coinciding with strong gyrations in the benchmark Japanese government bond yields.
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