By Carla Mozee and Victor Reklaitis, MarketWatch , Hiroyuki
Kachi
NEW YORK (MarketWatch) -- The dollar lost ground against the yen
Thursday, but the greenback has erased early losses to trade
slightly up against most major rivals.
The dollar (USDJPY) was down at Yen118.47 from Yen119.50 late
Tuesday.
The yen found support overnight as stock-market weakness on Wall
Street and in Europe spread into Asian markets. The Nikkei Stock
Average
(http://www.marketwatch.com/story/japanese-stocks-fall-most-in-two-months-2015-03-26)
fell 1.4%, its biggest decline in nearly two months.
"The market mood has turned to risk aversion since yesterday,"
said Mizuho Securities chief FX strategist Kengo Suzuki. Japan's
currency is seen as a haven that retains value at times of
financial instability.
Meanwhile, the euro (EURUSD) was buying $1.0920, down from
$1.0971 late Tuesday in New York, after gaining ground earlier
Thursday against the dollar. The ICE U.S. Dollar Index (DXY), which
gauges the dollar's strength against six other currencies, edged up
0.2% after trading in the red earlier.
A strong, multi-month run for the greenback this year hit a wall
last week after Federal Reserve policy makers indicated they may
keep interest rates on hold on for longer
(http://www.marketwatch.com/story/dollar-stays-weak-as-investors-look-for-fresh-clues-on-direction-2015-03-25)
than the market had generally anticipated.
Short covering has been "the main catalyst" for the euro's
recent gains as some investors unloaded long dollar positions after
the Fed meeting "on the basis that there could be a few weeks of
consolidation before U.S. data or the Fed gives the market a fresh
reason to buy dollars," said Kathy Lien, managing director at BK
Asset Management, in a late Wednesday note.
Next week's U.S. nonfarm payrolls report, figures on
manufacturing activity and the Fed's meeting in April "are the main
potential catalysts for dollar weakness. Between now and then, we
do not expect a deep selloff in the EUR/USD," she said.
Losses in European stocks continued Thursday, and U.S. stocks
dropped for the fourth day in a row
(http://www.marketwatch.com/story/us-stocks-futures-down-sharply-as-middle-east-tension-adds-to-risk-averse-mood-2015-03-26),
with reports of Saudi strikes in Yemen adding to the risk-averse
mood. The ramped-up tension in Yemen helped propel oil prices
(http://www.marketwatch.com/story/oil-prices-surge-as-saudi-strikes-in-yemen-trigger-supply-worries-2015-03-26)(CLK5)
higher on Thursday.
Hiroyuki Kachi of The Wall Street Journal/Dow Jones Newswires
contributed to this report.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires