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Dollar rises as weak Japanese CPI dampens expectations for interest rate hike

Dollar rises as weak Japanese CPI dampens expectations for interest rate hike

The dollar rose against the yen in Asia Friday as weaker-than-expected Japanese price data deflated market expectations for a Bank of Japan interest rate increase next month.
The dollar cost 121.38 yen midafternoon, up from 121.11 yen late Thursday in New York. The euro fell to US$1.2922, from US$1.2928.
Japanese investment banks and U.S. hedge funds reduced their yen holdings after the release of data showing that Japan's core consumer price index rose only 0.1 percent in December from a year earlier, less than the 0.2 percent rise projected by economists.
The figure shows that consumer prices are barely rising after years of deflation.
"Given this tame data, it's really difficult for the bank to explain the reason to tighten credit next month as domestic prices haven't improved," said Lehman Brothers economist Hiroshi Shiraishi.
The dollar could head above 122 yen because investors don't have excess dollar holdings now, traders said.
"Traders have finished adjusting their bloated dollar holdings," said Toru Tanaka, a senior trader at Mitsubishi Corp.
He said the market attention was now turning to U.S. events next week, such as a Federal Open Market Committee meeting, fourth-quarter gross domestic product and jobs data for January.
Although speculation is growing that European authorities may grumble about the yen's recent weakness in the run-up to the Feb. 9-10 meeting in Germany of financial heads of the Group of Seven leading industrialized nations, traders said such comments may have little impact.
The dollar was mixed against other regional currencies, climbing to 9,125 Indonesian rupiah from 9,050 the previous session, while slipping to 1,6045 Vietnamese dong from 1,6070. It jumped to 940.8 South Korean won from 936.0.


Updated : 2021-07-29 07:28 GMT+08:00