By Tatsuo Ito
The dollar was largely unchanged versus its rivals in Asia
Tuesday, with traders refraining from making any aggressive bets
before a national holiday in Japan and the Bank of Japan's one-day
policy board meeting on Thursday.
As of 0250GMT, the dollar was at Y119.12 against Y119.02 in late
New York Monday. The WSJ Dollar Index, a measure of the dollar
against a basket of major currencies, was up 0.06% at 86.33.
"The dollar/yen is now well-balanced between fading hopes for an
early rate increase in the U.S. and lingering expectations about
further easing in Japan," said Takahiro Iizuka, a trader at Mizuho
Trust and Banking.
While traders here are paying less attention to the outcome of
the U.S. policy-setting meeting this week, they have maintained
some caution over the BOJ meeting, even though many economists
expect there will be no major change to its policy both in the U.S.
and in Japan.
Mr. Iizuka said a chance of additional easing by the BOJ can't
be completely excluded, "given the past patterns that BOJ Governor
Haruhiko Kuroda surprised markets in the past".
He said the price of one-week USD/JPY options that cover the
BOJ's one-day meeting remained high since April 23, with terms
implying around 10% volatility in the currency pair.
By comparison, the same contract traded before April 23 was at a
relatively cheaper implied volatility of below 8%.
"This indicates that some overseas investors appear to be
betting on additional action by the BOJ. They appear to be buying
those options like lottery tickets," he added.
The BOJ's one-day policy board meeting twice a year -both in
late April and October- normally draws more attention than monthly
two-day meetings as the central bank sets the tone for its future
policy based on the release of semiannual outlook report on
inflation and growth.
A unusual call from an influential lawmaker urging the central
bank to take action also has heightened caution among traders.
The single currency was at $1.0873 versus 1.0894. Recent gains
in global oil prices and optimism that Greek's debt problem could
be solved without causing serious damage to the global economy have
kept the single currency solid, traders said. But Yunosuke Ikeda,
head of FX strategy at Nomura Securities said in a note that "it's
hard to expect the euro to turn upward," citing funds flow out of
the region and views that interest rate gap between the Eurozone
and the U.S. would widen as reasons for fundamental weakness in the
euro.
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT
Latest Previous %Chg Daily Daily %Chg
2150 GMT High Low 12/31
Dollar Rates
USD/JPY Japan 119.12-13 119.04-05 +0.07 119.20 119.02 -0.50
EUR/USD Euro 1.0873-76 1.0889-92 -0.15 1.0893 1.0867 -10.12
GBP/USD U.K. 1.5230-35 1.5236-41 -0.04 1.5240 1.5219 -2.22
USD/CHF Switzerland 0.9547-51 0.9548-52 -0.01 0.9567 0.9541 -3.96
USD/CAD Canada 1.2105-10 1.2084-89 +0.17 1.2111 1.2086 +4.18
AUD/USD Australia 0.7865-69 0.7858-62 +0.09 0.7875 0.7834 -3.72
NZD/USD New Zealand 0.7621-27 0.7642-48 -0.27 0.7647 0.7620 -2.19
Euro Rate
EUR/JPY Japan 129.52-56 129.61-65 -0.07 129.67 129.47 -10.63
EUR/JPY Yen
Source: ICAP PLC
Write to Tatsuo Ito at tatsuo.ito@wsj.com