The dollar strengthened from a one-month low against the yen on speculation its longest losing streak since July was unwarranted given U.S. economic growth is likely to outpace Japan’s.
The greenback rose for the third time in four days versus the euro as analysts predict European data today will show industrial production slumped in August. The yen fell against most of its 16 major counterparts as U.S. stock futures rallied, damping demand for Japan’s haven assets. Australia’s dollar gained for a second day after China’s central bank cut an interest rate it pays lenders on repurchase agreements, signaling possible monetary easing.
“Dollar-yen doesn’t tend to sell off too much in Asia, where there tend to be buyers on dips, and that’s what we’re seeing,” said Tim Kelleher, head of institutional foreign-exchange sales at ASB Bank Ltd. in Auckland. “There’s strong resistance around 107.50 yen on the day, so the dollar is unlikely to rise too much.”
The dollar rose 0.2 percent to 107.09 yen at 6:47 a.m. in London after earlier sliding to 106.76, the weakest since Sept. 11. The currency had dropped for the past three days in the longest losing streak since the period ended July 8. The U.S. currency gained 0.2 percent to $1.2724 per euro. The yen was little changed at 136.25 per euro.
The dollar breached the lower boundary of its 20-day Bollinger Band against the yen yesterday, indicating it may be poised for a bullish reversal. The band identifies possible turning points in an asset’s direction.
Source: Bloomberg (14 Oct 2014)
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