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Dollar near one-week high vs yen, supported by rise in US yields

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by December 21, 2017 General

A woman looks at screens displaying, stock quotes, the Nikkei average and the Dollar to Yen exchange rate outside a brokerage in Tokyo, August 25, 2015. — Reuters picA woman looks at screens displaying, stock quotes, the Nikkei average and the Dollar to Yen exchange rate outside a brokerage in Tokyo, August 25, 2015. — Reuters picNEW YORK, Dec 21 — The dollar held near a one-week high against the yen this morning, supported by a rise in US bond yields, with moves limited ahead of a Bank of Japan policy decision and a news conference by the BOJ governor.

The dollar eased 0.1 per cent to ¥113.28 (RM4.07), after rising to as high as ¥113.47 yesterday, its strongest level since mid-December.

A rise beyond last week’s high of ¥113.75 would send the dollar to its highest level in more than a month.

Analysts said the dollar was supported against the yen after the US 10-year Treasury yield rose to a nine-month high yesterday as investors worried over whether the tax cuts would lead to higher US debt, increased bond issuance, and more aggressive rate hikes by the Fed.

The Republican-controlled US House of Representatives gave final approval yesterday to the biggest overhaul of the US tax code in 30 years, sending a sweeping US$1.5 trillion (RM6.11 trillion) bill to President Donald Trump for his signature.

A rise in German bond yields helped underpin the euro, which held steady at US$1.1873, having risen more than 1 per cent so far this week.

Against the yen, the euro last traded at ¥134.48.

Yesterday, the euro had risen to as high as ¥134.76, its strongest level against the yen since October 2015.

The Bank of Japan is widely expected to keep its short-term interest rate target at minus 0.1 per cent at its policy decision due out later today and pledge to guide 10-year bond yields around zero per cent.

Market players, however, are looking to a post-meeting news conference by BOJ Governor Haruhiko Kuroda, for clues on whether the central bank is getting closer to joining the US Federal Reserve and European central banks in winding back stimulus.

A speech by Kuroda in November sparked such speculation when he mentioned the concept of a ‘reversal rate’ – a level at which low interest rates start to have more harmful side-effects than benefits.

If Kuroda’s comments are interpreted as sounding hawkish the dollar might come under pressure against the yen, said Stephen Innes head of trading in Asia-Pacific for Oanda in Singapore.

“If he maintains the dovish narrative, which we’re all expecting, maybe we get a little bounce higher on dollar/yen,” Innes said, adding however, that he wasn’t expecting Kuroda’s comments to trigger any aggressive moves. — Reuters

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