Dollar nearly flat against rivals ahead of data, FOMC
Tokyo (July 28) The dollar was nearly flat against the yen and the euro in Asia trade Monday, with investors sitting on sidelines ahead of major events later this week, including the Federal Open Market Committee meeting and U.S. jobs and gross domestic product data.
The U.S. dollar was at ¥101.81 from ¥101.83 late Friday in New York. The euro fell slightly to $1.3428 from $1.3429.
The greenback was in tight range throughout the session as investors lacked fresh cues ahead of second-quarter U.S. GDP data Wednesday and July jobs data Friday. Investors are keen to see how U.S. interest rates will react to these indicators. And while little surprise is expected from the outcome of the FOMC’s two-day meeting Wednesday, investors are looking for signs on the future direction of monetary policy.
The dollar’s advantage has become “more prominent” compared with other currencies, said Marito Ueda, director at FX Prime Corp.
“I think it may be about time for investors to feel signs that the dollar will gain momentum” after digesting Friday’s jobs data and confirming brisk economic performance for the summer, Mr. Ueda said.
But it may be still premature to expect a full-fledged greenback rise against the yen. Investors are reluctant to pour money into riskier assets globally, keeping it flowing into U.S. Treasurys instead, putting a lid on any strong rises in U.S. long-term yields, he said.
“As long as there is such a picture in the market, the currency won’t likely step out of persistent range-bound trade,” said Mr. Ueda, who expects the dollar to move in a ¥101.10-¥102.20 range this week.
Aside from economic news from the U.S., a number of geopolitical risks warrant continued monitoring, said Junya Tanase, chief FX strategist at J.P. Morgan in Tokyo.
Concerns such as the possibility of additional sanctions against Russia may send nervous investors fleeing riskier assets, causing U.S. Treasury yields to fall. Mr. Tanase said a dollar-yen consistent with the current U.S.-Japan yield gap isҰ¥101.42, slightly lower than the current level.
In other currency trade, the euro weakened to ¥136.72 from ¥136.77.
The WSJ Dollar Index XX:BUXX -0.03% a measure of the dollar against a basket of major currencies, was unchanged at 73.40.
