By FXEmpire.com
The greenback rose above 79.50 yen in late Asian trading on the back of yen selling from players who became less risk-averse over the European debt problem.
The dollar stood at 79.56-58 yen, up from 79.32-32 yen at the same time Monday. The euro was at 1 dollars.2799-2800, up from 1 dollars.2775-2775, and at 101.82-85 yen, up from 101.32-34 yen.
The dollar topped 79.50 yen in late trading as position-adjusting buying took the upper hand, traders said. Excessive worries about the European debt crisis have subsided, some market sources said.
The U.S. currency also drew support from the yen’s softness against other major currencies, such as the Australian dollar. “The yen was sold somewhat reflecting an easing in risk aversion,” said an official of a major Japanese bank.
Still, market participants generally refrained from active trading, keeping eyes on crucial events such as the Bank of Japan’s two-day monetary policy meeting that ends Wednesday and an informal European Union summit meeting also Wednesday.
While the central bank is widely seen to stand pat on its monetary policy, overseas investors are still expecting the central bank to decide on additional easing, market sources said.
The dollar traded aimlessly below 79.50 yen in Tokyo on Monday as players were sidelined to await further developments over the Greek debt problem.
In the early going, the dollar inherited its weak tone from overseas trading Friday, in which it dropped as low as 79.01 yen, reflecting weak U.S. economic indicators released recently. The dollar was sold versus the yen also in line with the euro’s rebound against the greenback.
But the U.S. unit’s downside was supported by speculation that Japanese authorities might step into the market to sell yen if the dollar falls below 79 yen, market sources said.
The dollar displayed some resilience in the afternoon as some investors sold the yen, taking a cue from Chinese Premier Wen Jiabao’s remarks over the weekend showing the country’s plan to put more emphasis on growth, a city bank official said.
Investor concerns about the Greek crisis have abated somewhat after leaders of the Group of Eight major countries expressed their hopes to see the debt-stricken country remain in the eurozone in their joint statement adopted at their two-day summit in the United States through Saturday.
Currency trading was generally slow, an official of a major Japanese bank said, noting, “Unless there is breaking news [over the Greek situation], players are expected to continue taking a wait-and-see stance” until the country holds fresh parliamentary elections June 17.
Investors are waiting on Wednesday EU summit; with lots of new items on the agenda, it should be a hot potato.
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