Dollar slips vs yen, on
track for weekly losses
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[September 09, 2016]
By Patrick Graham
LONDON (Reuters) - North Korea's latest
nuclear test pulled cash into the perceived safety of the Japanese
yen and U.S. dollar on Friday, at the end of a week that has
provided little clear direction for currency investors returning
from U.S. and European summer breaks.
The dollar more broadly is down 1 percent or more for the week
against most major currencies but it gained ground for a second day
against the Korean won, and New Zealand and Australian dollars as
news of the test filtered through.
The announcement late in the European day on Thursday of a speech by
U.S. Federal Reserve Governor Lael Brainard also had dealers
speculating that she might draw back on her long-held scepticism
about a near-term rise in interest rates.
That helped eat into the euro's gains against the dollar after a
European Central Bank meeting which quelled expectations of swift
moves toward a further easing of policy that would flood the market
with yet more euros next year.
"Really the euro should have gained yesterday but this announcement
of a Brainard speech right at the last moment before the blackout
period for the Fed has made people nervous," said Richard Benson,
co-head of portfolio management at currency fund Millennium Global
The euro and the yen's strength have been the nearest thing currency
investors have had to a theme over the past few weeks.
Both are looking extremely resilient in the face of expectations of
more easing by the Bank of Japan and the ECB; as that looks
substantially like a reflection of scepticism that either bank has
enough fire power to weaken their currency durably.
"I would say there's a lot of uncertainty on the yen, but on the
euro yes there is doubt about the ECB's ability to do enough,"
The dollar fell 0.4 percent against the yen in early trade in Europe
on Friday and was on track for a weekly loss of 1.8 percent. <JPY=>
The euro was also 0.1 percent higher at $1.1278, though that left it
well short of Thursday's two-week highs above $1.13.
North Korea announced on Friday it had conducted its fifth nuclear
test, hours after seismic monitors detected a blast near the
secretive country's nuclear test site.
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United States one dollar bills are seen on a light table at the
Bureau of Engraving and Printing in Washington November 14, 2014.
REUTERS/Gary Cameron/File Photo
A disappointing U.S. non-farm payrolls report a week ago and a
weaker-than-expected service sector survey on Tuesday led some
investors to trim bets that the Fed would be raising rates as early
as this month, despite a chorus of Fed officials signaling that the
time to hike was approaching.
Several Fed officials are due to speak ahead of Brainard's speech on
Jesper Bargmann, head of trading for Nordea Bank in Singapore, said
the dollar would probably stay above 100 yen and trade toward 104
yen to 105 yen ahead of the monetary policy decisions by the BOJ and
Fed this month
"I think we will see a slightly higher dollar/yen…on some
expectation, even if it's small, of BOJ stepping into unknown
territory," Bargmann said, referring to the possibility that the BOJ
could aggressively expand its monetary stimulus.
(Aditional reporting by Masayuki Kitano in Singapore)
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