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Dollar edges up ahead of trade data
November 10, 2005
Tokyo - The dollar edged higher against other major currencies in Asian trade on Thursday as the market awaited the latest US trade deficit figures, dealers said.
The dollar rose to ¥117.71 in afternoon trade in Tokyo from ¥117.53 in New York late Tuesday.
The euro slipped to $1.1756 from $1.1763 but held above a two-year low of $1.1711 seen on Tuesday.
It rose to ¥138.41 from ¥138.26.
"Traders are still focusing on interest rate differentials between the dollar and other major currencies," said Kousuke Hanao, currency strategist at RBS Securities Japan.
The yen's strength against currencies other than the dollar was limiting its decline against the US unit, he added.
"Riots in France as well as uncertainty over the outlook of the European Central Bank's interest rate policy are weighing on the euro," Hanao said.
The market was awaiting the US trade data for September due later Thursday, with Wall Street economists expecting a slight widening of the deficit to $60 billion from $59 billion in August.
While the US Federal Reserve is expected to continue with its series of interest rate hikes, expectations that the European Central Bank may be close to raising its key lending rate have faded this week.
The ECB is facing calls from employers and finance ministers in the 12-nation eurozone to refrain from raising its key interest rate yet from 2.00 percent where it has been for nearly two-and-a-half years.
However, Bundesbank president Axel Weber on Wednesday stressed that the ECB's monetary policy would not be affected by criticism from eurozone finance ministers, who have urged the ECB not to take "hasty monetary decisions".
He said that risks to price stability have increased in the euro area in recent weeks.
In France, where disaffected youths have sparked the country's worst unrest since May 1968, authorities reported an easing of violence after curfews came into force in more than 30 towns and cities.
Dealers were also looking ahead to a first reading of Japan's gross domestic product growth in the third quarter on Friday.
The data would lift the yen "only if they indicate something on consumer prices," which would give clues as to when and if Japan will see a tightening of monetary policy, Hanao said.
Masashi Hashimoto, a currency analyst at Bank of Tokyo-Mitsubishi, said dealers were also awaiting upcoming US consumer confidence data which could shed fresh light on the prospects for further US interest rate rises.
"The US economy is dependent on consumer spending so the trend (in consumer spending) is a key factor," he said.
In early afternoon trading, the dollar rose to 54.750 Philippine pesos from 54.620 on Wednesday, to 1.7020 Singapore dollars from 1.7009 and to 1 047.5 South Korean won from 1 046.5.
The dollar fell to 41.235 Thai baht from 41.260, to 9 987
Indonesian rupiah from 10 035 and to 33.636 Taiwan dollars from 33.66. - AFP
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