By Hiroyuki Kachi
The dollar was a tad higher against the yen and the euro during
Asian trade Thursday, encouraged by what investors interpreted as a
slightly hawkish statement from the Federal Open Market Committee
in deciding when to raise short term rates.
The greenback advanced to Y124.19, its highest since July 21,
before paring earlier gains to Y124.10 at around 0450 GMT. That
compared with Y123.94 late Wednesday in New York. The U.S. currency
also strengthened against the euro, which fell to $1.0972 midday
from $1.0986 in New York overnight.
The WSJ Dollar Index, a measure of the dollar against a basket
of major currencies, was up 0.06% at 88.46.
The U.S. dollar tracked the overnight firm tone that followed
the Federal Reserve's statement after a two-day policy setting
meeting. The stock market's solid performance in Asia also
encouraged market sentiment to help the dollar ratchet up in the
morning session before stabilizing just above the Y124-line.
The Fed on Wednesday left its benchmark short-term interest rate
near zero, but dropped several hints that it is close to seeing
enough improvement in the job market to prompt officials to raise
the rate as early as September.
For months, Fed officials have said they wanted to see
"additional improvement in the labor market" before being convinced
it is time to raise rates. In Wednesday's statement they said they
wanted to see "some" additional improvement, suggesting they see
themselves nearing their threshold on the jobs front for
action.
"They didn't say it clearly but investors can slightly smell (a
rate increase) in September," said Koji Fukaya, chief executive at
FPG Securities.
But Mizuho Bank chief market economist Daisuke Karakama
continues to expect a December hike. The Fed policy setting members
didn't provide hints of raising rates that means they need to keep
intact basic stance of "data dependency" ahead of closely-watched
jobs data scheduled twice ahead of the next FOMC scheduled Sept.
16-17.
"Expectations for a rate raise are so faint, you can blow them
away," he said.
The Shanghai Composite was last trading down 0.04%. Meanwhile,
Japan's Nikkei Stock Average was up 1.1% at midday.
In other currency trades, the euro was at Y136.16 midday from
Y136.17 overnight.
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT
Latest Previous %Chg Daily Daily %Chg
Dollar Rates Close High Low 12/31
USD/JPY Japan 124.09-10 123.93-94 +0.13 124.20 123.89 +3.65
EUR/USD Euro 1.0973-76 1.0984-87 -0.10 1.0992 1.0960 -9.29
GBP/USD U.K. 1.5600-02 1.5603-05 -0.02 1.5609 1.5590 +0.14
USD/CHF Switzerland 0.9686-90 0.9679-83 +0.07 0.9691 0.9666 -2.56
USD/CAD Canada 1.2955-60 1.2943-48 +0.09 1.2962 1.2945 +11.50
AUD/USD Australia 0.7318-22 0.7293-97 +0.34 0.7321 0.7287 -10.41
NZD/USD New Zealand 0.6635-41 0.6663-69 -0.42 0.6671 0.6621 -14.84
Euro Rates
EUR/JPY Japan 136.14-18 136.10-14 +0.03 136.30 135.97 -6.06
Source: Tullett Prebon
Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com