Dollar pushes towards 110 yen in Asia

AP FILE PHOTO

TOKYO – The dollar rose Monday after data showed the US economy grew more than first thought in April-June, while it hit a six-month high against the Hong Kong dollar after weekend unrest in the southern Chinese city.

Analysts said the US unit would break the 110 yen threshold “sooner or later” as the US economy gets back on track.

The greenback bought 109.40 yen in Tokyo on Monday, up from 109.28 yen in New York.

The single European currency was trading at $1.2678, down from $1.2683 in US trade on Friday, and at 138.69 yen against 138.60 yen.

Traders moved into the dollar after the Commerce Department said the US economy grew 4.6 percent in the second quarter, better than the previous 4.2 percent estimate.

The figure represents a strong rebound from the first quarter’s 2.1 percent contraction, which was blamed in part on unusually severe winter weather that hit the country.

With strong appetite for the dollar among investors, the greenback may break 110 yen before the release of US jobs data on Friday, Nomura Securities chief FX strategist Yunosuke Ikeda said in a morning note.

If the jobs data is positive, the pair may go up even higher, dealers said.

“The dollar remains bullish and looks certain to hit 110 yen sooner or later,” Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, told Dow Jones Newswires.

“If the headline jobs data comes in stronger than expected and Treasury rates rise, an overshoot of 110 yen is entirely possible.”

Japanese stocks are expected to benefit from a lower yen, a positive for exporters as it makes their products cheaper in overseas markets and inflates their yen-denominated profits.

Investors were also closely monitoring the $1.2 trillion Government Pension Investment Fund, which is expected to boost its equities allocation.

That move would likely signal a follow-through from other pension funds and drive up demand on the Tokyo Stock Exchange, pushing prices up accordingly.

The Hong Kong dollar slipped to 7.7623 against the greenback — its lowest since March — as pro-democracy protests brought parts of the city to a standstill with many schools, businesses and banks shut down.

The dollar is pegged to the greenback but can move within a band of 7.75 to 7.85.

Monday’s Hong Kong dollar losses came after a weekend of unrest – the worst in the city since the 1997 handover to China – that saw police fire volleys of tear gas into thousands of protestors.

The dollar was mostly higher against other Asia-Pacific currencies.

It rose to Sg$1.2744 from Sg$1.2707 on Friday, to 12,157.00 Indonesian rupiah from 12,021.00 rupiah, to 32.34 Thai baht from 32.32 baht and to 44.93 Philippine pesos from 44.88 pesos.

It also firmed to Tw$30.35 from Tw$30.30 and to 1,051.20 South Korean won from 1,042.65 won.

The greenback fell to 61.39 Indian rupees from 61.42 rupees.

The Australian dollar dropped to 87.03 US cents from 87.66 cents while the Chinese yuan bought 17.85 yen against 17.73 yen.

Originally posted: 12:02 pm | Monday, September 29th, 2014