By Tatsuo Ito
The dollar was solid against the yen in Asia Friday, but trading activity was subdued amid a summer holiday in Japan.
Relatively favorable risk-taking sentiment has taken hold as the diminishing number of worrisome headlines related to Ukraine and Iraq has lessened concerns over geopolitical risks, traders said.
At 0450 GMT, the dollar was at Y102.53 against Y102.45 late Thursday in New York.
The euro was at $1.3364 against $1.3367.
While the market has regained some composure after recent U.S. air strikes on Iraq, traders are still guarding themselves from a rise in such risks, limiting the dollar's rally.
"Conditions aren't necessarily improving significantly, so you can't rule out the possibility that risk-averse sentiment will flare up again," said Junya Tanase, chief forex strategist at JPMorgan in Tokyo.
Downward pressure on long-term U.S. rates is also strong, Mr. Tanase added, putting a lid on rises in the greenback.
In light of the possible influence on U.S. interest rates, he is focusing on U.S. economic data later in the global day, including the Empire State Manufacturing Survey and the Thomson Reuters/University of Michigan Survey of Consumers.
On the downside, the dollar got support from both technical and demand-supply factors. Dollar-selling demand from investors converting interest income on their U.S. Treasury holdings in dollars into yen ran its course, traders said. A relatively large sum of such interest is normally paid on the 15th of February and August.
"People are also mindful of the 200-day moving average, which is now around Y102.30," said Shinji Kureda, head of FX trading group at Sumitomo Mitsui Banking Corp.
Looking ahead, Yuji Saito, executive director of foreign exchange at Credit Agricole Corporate & Investment Bank in Tokyo, expects the dollar to rise as high as Y103.50 next week.
He said a speech next week by Fed chair Janet Yellen at Jackson Hole, Wyo., would be in focus, including her assessment of slack in the labor market.
"The market has recently been expecting the Fed chair to start talking about the picture of post-tapering" to come after the end of the Fed's asset purchases in October, Mr. Saito said.
"Under these conditions, traders are inclined to go dollar-long," he added.
He also cited market talk that overseas macro hedge funds are gradually building fresh, dollar-long positions in case of a rise in U.S. interest rates.
The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was flat at 73.92.
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT
Latest Previous %Chg Daily Daily %Chg
2150 GMT High Low 12/31
Dollar Rate Close High Low 12/31
USD/JPY Japan 102.53-56 102.44-47 +0.09 102.56 102.46 -2.62
EUR/USD Euro 1.3365-68 1.3364-67 +0.01 1.3368 1.3359 -2.75
GBP/USD U.K. 1.6692-94 1.6684-99 +0.01 1.6693 1.6682 +0.82
USD/CHF Switzerland 0.9063-68 0.9064-68 0.00 0.9070 0.9064 +1.52
USD/CAD Canada 1.0894-98 1.0900-04 -0.06 1.0908 1.0894 +2.58
AUD/USD Australia 0.9325-27 0.9317-21 +0.07 0.9327 0.9314 +4.61
NZD/USD New Zealand 0.8484-88 0.8490-95 -0.07 0.8494 0.8468 +3.22
EUR/JPY Japan 137.01-06 136.90-95 +0.08 137.07 136.88 -5.32
Source: ICAP PLC
Write to Tatsuo Ito at email@example.com
(END) Dow Jones Newswires
August 15, 2014 01:51 ET (05:51 GMT)
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