Dollar Under Pressure in Asia

The dollar struggled against the yen in Asia on Thursday after tumbling in New York trade in response to a weak batch of US data that has sparked fears about the world’s number one economy. 

In midday Tokyo trade, the dollar bought 106.00 yen, slightly up from 105.91 yen in New York, but sharply lower than 107.33 yen in Tokyo earlier Wednesday.

Dollar down
Dollar under pressure in Asia

At the start of the month, the greenback broke 110 yen for the first time in six years. The euro was at $1.2821, against $1.2834 in New York but still much stronger than the $1.2702 earlier Wednesday in Tokyo. The single currency was also at 136.05 yen against 135.94 yen in New York “Investors are increasingly concerned about potential slowdown in the US economy through contagion from the rest of the world and due to the spread of Ebola,”

Credit Agricole said. The US Commerce Department said retail sales fell in September for the first time in seven months, while the Labor Department said US producer prices fell last month for the first time since August 2013. Analysts had expected a rise

The news led to fears that the US economy, which has been showing strong signs of recovery this year, may be feeling the effects of a struggling eurozone, a slowdown in China and stuttering Japanese growth. The weak figures dampened the likelihood of the Federal Reserve lifting interest rates from record lows any time soon, putting further downward pressure on the dollar. Fears about the spread of the Ebola virus in the United States also hit sentiment. US President Barack Obama held a crisis meeting with top aides at the White House on Wednesday after a second infection was diagnosed at a Texas hospital where a Liberian man died a week ago.

He pledged a “much more aggressive” response at home to the disease but insisted the risk of a serious outbreak on US soil was low. “Wound-licking, puzzlement and regrouping will be the order of the day today,” National Australia Bank said in a note titled “Get Me Out of Here!”

However, Mizuho Securities chief forex strategist Kengo Suzuki said the dollar’s fall may be a “good opportunity to invest in dollar-denominated assets” as the Fed reins in its stimulus, while Japan’s central bank looks set to expand its monetary easing programme. – AFP