Dollar
drops from post-jobs report high, German data aids euro
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[June 08, 2015]
By Anirban Nag
LONDON (Reuters) - The dollar fell from
near 13-year highs against the yen on Monday on a media report that U.S.
authorities were uncomfortable with their strong currency, prompting
some traders to trim favourable bets in the greenback.
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U.S. President Barack Obama was quoted in a Bloomberg report citing
an unnamed French official as saying that a strong dollar was a
problem. The report came after a group of French reporters met
President Francois Hollande on Monday ahead of the second day of the
G7 summit.
Although the White House denied the report, investors are wary given
U.S. officials, including from the Federal Reserve, have in the past
few months raised concerns about a strong currency impacting growth
and exports.
"Such a pick-up in verbal intervention would represent at least a
temporary threat for a weaker dollar given that it comes in the wake
of recent buying and this should be particularly true against
currencies such as yen," said Todd Elmer, currency strategist at
Citi.
The dollar fell 0.3 percent at 125.28 yen, having hit a 13-year high
of 125.86 yen on Friday after a robust U.S. jobs report.
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"The dollar is off this morning because of the headline about a
strong dollar from Obama," said Alvin Tan, currency strategist at
Societe Generale.
"Nevertheless, the dollar ended firm last week and the U.S. data,
especially average earnings, seems to support the case for a rate
hike. We are expecting one in September."
A Reuters poll conducted after the payrolls data on Friday showed
Wall Street's top banks expect the Fed to begin raising interest
rates in September, followed by another before the end of the year.
New York Fed President William Dudley said on Friday he still
expects the Fed to be in a position to raise interest rates later
this year even though he has concerns about progress in the labour
market.
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Speculators increased bets against the yen, with net short positions
rising to their largest level in four months last week.
There was little reaction to data released on Monday that showed
Japan's economy expanded more than initially expected in
January-March as companies ramped up investment.
The euro edged up on rising Bund yields and better-than-expected
German industrial output data which suggested that Europe's largest
economy got off to a good start in the second quarter. The euro
changed hands at $1.1130, up 0.1 percent on the day.
Nevertheless, the euro was likely to find it tough to gain much as
it remained hostage to shifts in sentiment over Greece's debt
problems.
(Editing by Hugh Lawson and Janet Lawrence)
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