Greenback Holds Steady in Asia as Dollar Index Pulls away from 7-month Low

By: Barbara Zigah

In Asian trading today, as reported at 2:53 p.m. (JST), the U.S. Dollar managed to hold steady against the Japanese Yen, trading at 84.20 Yen, very near to the New York close, while the U.S. Dollar Index traded at 79.42 .DXY, distancing itself from Monday’s 7-month low. Many market players believe that the greenback’s trend remains on a downward slope.

Even a recent media report from the Wall Street Journal, which reported that the Federal Reserve Bank’s U.S. bond buying program would be temporarily pared down, could not dissuade market players from that belief. According to them, regardless what easing activities the Federal Reserve may take in the future, it will still be deemed aggressive in comparison to central banks in Europe and elsewhere.  One forex trader in a Japanese bank noted that it was his opinion that the European Central Bank and the Bank of Japan are more skeptical as regards the advantages of monetary easing, and that the Federal Reserve Bank’s stance is the most dovish, comparatively.

Some market players expect to see more U.S. Dollar selling by exporters in Japan prior to September 30^th, the close of the first half of the Japanese fiscal year, despite the limited seasonal flows that have so far been recorded.