Dollar edges down in Asia trade

TOKYO - The dollar edged down in Asia on Thursday as Japanese exporters bought up the yen and following data showing the US economy shrunk at a faster rate than initially thought in the first quarter of the year.


The greenback was changing hands at 101.79 yen in Tokyo afternoon trade, marginally down from 101.86 yen in New York Wednesday afternoon. "For technical reasons, the dollar fell because of yen-buying by exporters, but this is not strong enough to break the current range," said Yosuke Hosokawa, head of FX sales team at Sumitomo Mitsui Trust Bank.


"Trading is still directionless as we have not seen clear trading factors for a long time," Hosokawa said. "We have seen geopolitical factors such as violence and issues in Iraq or Russia, but they matter more to the euro than the yen," Hosokawa said.


The euro changed hands at $1.3631 and 138.78 yen, compared with $1.3628 and 138.82 yen in New York late on Wednesday. In New York the dollar slipped on news of a larger-than-expected first quarter contraction in the US economy, with investors taking the report as dovish for interest rates.


US Treasury yields also sank on the news that the economy contracted 2.9 per cent in January-March, far greater than the 1.0 per cent previously estimated and the sharpest fall since the 2008-2009 recession. That put a damper on recent speculation that growth is stronger than the Federal Reserve lets on and could drive it to an early increase in interest rates. Investors are now awaiting fresh US data for May later in the day.


Atsushi Hirano, head of FX sales Japan at RBS, told Dow Jones Newswires that the dollar may strengthen if the Nikkei index gains, but the pair will likely hover around 101.85 "without much buying or selling". The dollar was mixed against other Asia-Pacific units.


It fell to Sg$1.2490 from Sg$1.2514 on Wednesday, to Tw$29.93 from Tw$29.97 and to 43.82 Philippines pesos from 43.95 pesos. It also declined to 1,016.38 South Korean won from 1,021.11 won and to 32.46 Thai baht from 32.48 baht but rose to 12,089.00 Indonesian rupiah from 12,087.50 rupiah. The Australian dollar rose to 94.02 US cents from 93.61 cents, while the Chinese yuan was trading at 16.33 yen against 16.32 yen.

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