On Monday the dollar maintained its gains since last week
against the yen in Asia trade, as investors remained cautious
before the Bank of Japan wraps up its policy setting meeting later this
week.
The greenback was at ¥120.05 yen, compared with ¥119.90 yen late Friday in New York.
The U.S. currency was lower against the euro, which rose to $1.1235
midday from $1.1208 late Friday.
The common currency was last at ¥134.86 from ¥134.41.
Soft U.S. jobs data released
Friday - comprising weak growth in non-farm payrolls, revisions in
previous months, poor hourly wage gain and labor participation - weakened hopes that the Federal Reserve will increase short-term rates as soon as this year.
But the dollar is being resilient, as it maintained the weekend gains Monday after bouncing back from a trough of 118.68 yen shortly after the downbeat labor data.
Some analysts pointed out that the dollar’s strength against the yen is traced to growing expectations that the Bank of Japan will ease its monetary grip later in the week, given recent data suggesting the economy may have returned to recession over the summer.
The economy has barely regained momentum since shrinking 1.2% in the
April-June period, as China’s deepening slowdown hurt exports.
Industrial output dropped in August for the second straight month. Core
inflation dipped 0.1% in August, the first fall in more than two years, in
a blow to BOJ Governor Haruhiko Kuroda’s efforts to buoy them at 2%.
Official data issued earlier today said that Japan’s average cash earnings fell unexpectedly in the last quarter. In a report, Japanese Ministry of Health, Labour and Welfare said that Japan’s Average Cash Earnings fell to a seasonally adjusted 0.5%, from 0.9% in the preceding quarter whose figure was revised up from 0.6%. Economists had expected Japan’s Average Cash Earnings to rise to 0.7% in the last quarter.
“The U.S. jobs data cast doubt about U.S. labor market situation. But it may take time to confirm the case. So that the Bank of Japan and the European Central Bank are emerging as the next trading cues,” said Kyosuke Suzuki, head of FX and money market sales department at Societe Generale in Tokyo.
Forex investors shrugged off news that the U.S.
and 11 countries around the Pacific were in the home stretch Sunday on
talks to complete a sweeping trade agreement.
The Trans-Pacific Partnership, which has been in the works since 2008, would lower barriers to goods and services and set commercial rules of the road for two-fifths of the world’s economy.
