TOKYO, Oct 15 The dollar hovered near last week's two-month high against the yen on Monda

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TOKYO, Oct 15 (Reuters) The dollar hovered near last week's two-month high against the yen on Monday, supported by receding expectations for a Federal Reserve rate cut this month, while the New Zealand dollar fell on tamer-than-expected inflation data.

Data released on Friday showed that U.S. retail sales beat market forecasts by rising 0.6 percent in September, despite ongoing worries that a housing sector slump could hurt personal consumption, and added to doubts about whether the Fed would cut interest rates this month.

But while the dollar rose against the yen on Friday, the impact was dulled by caution before a Group of Seven meeting later this week, traders said.

''With the G7 just ahead, it's not a situation where traders want to react in a big way to macroeconomic data,'' said a trader for a major Japanese trading house.

The dollar stood at 117.62 yen as of 2358 GMT, little changed from late U.S. trading on Friday and near a two-month high of 117.79 yen struck on electronic trading platform EBS last Thursday.

The euro slipped to $1.4164 compared to around $1.4180 in late New York on Friday.

The New Zealand dollar fell around 0.3 percent on the day to $0.7736 after data showed that New Zealand's consumer price index rose just 0.5 percent in the third quarter against market expectations of a rise of 0.8 percent.

WAITING FOR G7 The data supported market expectations that the Reserve Bank of New Zealand would keep interest rates on hold.

Market players are cautious about making active bets on currencies ahead of a meeting of G7 finance ministers in Washington on Friday, traders said.

Amid the focus on the G7, European Central Bank President Jean Claude Trichet told television station CNBC Europe that currency traders speculating on the yen and currencies in emerging markets should be aware of the risks they are taking.

Markets should take into account that there is ''good news'' about the Japanese economy, leading to ''two-way risks in this domain'', Trichet said, according to a CNBC transcript from the interview, repeating a previous stance.

The interview will be aired at 0620 GMT on Monday.

Trichet's remarks seem similar to comments he made at a G7 meeting in Essen, Germany in February and thus are unlikely to have much fresh impact on the market, said a trader for a major Japanese trading house.

Instead, the focus may be on whether U.S. officials pay heed to European concerns about the euro's strength by making stronger statements in support of dollar strength at the G7 than before, the trader said.

Reuters CS VP0547

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