Dollar Flat Against Yen After FOMC Minutes – Nasdaq

By Dow Jones Business News,  February 19, 2015, 12:29:00 AM EDT

By Hiroyuki Kachi

The dollar was almost flat against the yen in Asian trade Thursday, tracking overnight weakness after the U.S. Federal Reserve’s last policy meeting minutes reduced hopes for higher interest rates around the middle of this year.

Around 0450 GMT, the dollar was at Y118.64, compared with Y118.63 late Wednesday in New York.

The U.S. currency lost ground overnight as the Fed minutes showed that many officials warned a premature rate increase might weigh on economic growth, causing the two-year U.S. Treasury note to suffer its biggest one-day drop in more than three years.

Despite a comeback in the Nikkei Stock Average to a 15-year high earlier in the session, the greenback remained bound in a tight range throughout the morning session. The U.S. currency quickly dropped to as low as 118.42 after moving below Y118.50 to trigger stop-loss selling orders.

In early trading, the benchmark Nikkei increased 0.6% to 18305.93, reaching its highest intraday level since May 2000. The index was up 0.5% in mid afternoon.

“The FOMC minutes were not as hawkish as the market had expected,” said Shusuke Yamada, chief FX strategist at Merrill Lynch Japan, adding that lackluster U.S. economic indicators recently are also keeping a lid on the dollar’s upward momentum.

In addition, better than expected Japan’s merchandise trade balance is also having a synergetic effect by weighing down the dollar, said Mr. Yamada.

“It wouldn’t be a surprise if the dollar goes up in terms of the technical chart. But possibility is increasing that the dollar will be trapped in a range (currently between Y117 and Y119) for longer than expected,” said Mr. Yamada, adding that investors are cautious about possible jawboning from Japanese authorities ahead of upcoming local election scheduled in April.

Data released by the Ministry of Finance showed Thursday Japan’s trade balance came to a deficit of Y1.18 trillion, marking the 31st straight month of shortfalls. But that was 58% less than the trade deficit the country logged in January 2014. Japan tends to post larger trade deficits in January, when exporters typically are away from the market.

Among other currency trade pairs, the euro was at $ 1.1417 from $ 1.1397 and was at Y135.46 from Y135.22.

The European Central Bank Wednesday approved a request from Greece’s central bank to lend EUR68.3 billion to its country’s banks through an emergency credit facility.

The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was down 0.10% at 85.13.

 Interbank Foreign Exchange Rates At 23:50 EST / 0450 GMT                             Latest       Previous   %Chg    Daily    Daily   %Chg Dollar Rates                               Close            High      Low  12/31  USD/JPY Japan           118.64-65      118.78-79  -0.12   118.80   118.48  -0.90 EUR/USD Euro            1.1414-17      1.1396-99  +0.16   1.1426   1.1396  -5.65 GBP/USD U.K.            1.5445-50      1.5435-40  +0.06   1.5459   1.5435  -0.84 USD/CHF Switzerland     0.9413-17      0.9423-27  -0.11   0.9426   0.9407  -5.31 USD/CAD Canada          1.2445-50      1.2452-57  -0.06   1.2460   1.2438  +7.11 AUD/USD Australia       0.7804-08      0.7810-14  -0.08   0.7846   0.7795  -4.47 NZD/USD New Zealand     0.7560-66      0.7542-48  +0.24   0.7574   0.7535  -2.98  Euro Rate  EUR/JPY Japan           135.43-47      135.37-41  +0.04   135.48   135.20  -6.55 Source: ICAP PLC  

Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com

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