Dollar Flat Amid Lack of Fresh Cues

20/10/2015 11:29 AST

The dollar was unchanged against the yen and the euro in range-bound Asian trade Tuesday, as investors remained reluctant to make major bets given the lack of fresh trading cues.

Around 0450 GMT, the greenback was at Y119.49, unchanged from late Monday in New York.

Given there no fresh incentives during the Asian to give the currency market momentum, investors were watching the Tokyo stock market’s performance. But the benchmark stock rose only a moderate 0.4% as of midday, causing the dollar to move in a straightjacketed range between Y119.45 and Y119.55.

“Investors have found it difficult to take positions,” days ahead of a busy schedule of policy-setting meetings, said Toshihiko Sakai, senior manager of forex and financial products trading division at Mitsubishi UFJ Trust and Banking. The European Central Bank is set to meet on Oct. 22, the Federal Reserve on Oct. 27-28 and the Bank of Japan on Oct. 30.

Investors shrugged off the U.S. Treasury’s semiannual currency report released Monday, in which the Obama administration softened its criticism of China’s currency policy after Beijing in August adjusted its currency policy to let the yuan move more easily with the market.

The U.S. Treasury Department said the yuan is “below its appropriate medium-term valuation.” In its previous report it said the currency was “significantly undervalued.”

The report is sometimes an occasion for the U.S. to criticise its international peers and contains cues for the foreign exchange market.

The change to the expression about China may suggest “currencies aren’t among hot issues,” said Mr. Sakai at Mitsubishi UFJ Trust.

“There are issues over economies, in China and emerging and resource-exporting countries. And there also are issues surrounding U.S. (monetary policy) normalization. Currencies come after these issues ,” said Mr. Sakai.

Federal Reserve Bank of San Francisco President John Williams said Monday “the economy is on a good trajectory,” but there are risks emanating from overseas economies. Mr. Williams, a voting member of the Federal Open Market Committee, who has spent much of this year pointing to a rate rise before the close of 2015, said the outlook for rates has become trickier in the short term.

Among other currencies, the Canadian dollar weakened slightly as Canada’s Conservative leader was ousted in a national vote Monday after almost a decade in power, as voters showed a strong desire for change.

The U.S. dollar was recently at C$1.3035 from C$1.3021 late Monday.

The U.S. dollar was unmoved against the euro, which was at $1.1335 midday from $1.1329 late Monday. The common currency was at Y135.46 from Y135.32.

The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was down 0.04% at 87.18.

WSJ