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TOKYO, Mar 15 (Reuters) The dollar stayed weak on Wednesday, hobbled by a view that US interest rates may not rise as much as initially thought as traders awaited US economic data due later in the session.

The US currency fell 1.1 percent against the yen and 0.8 percent versus the euro on Tuesday on worries the Federal Reserve could soon end its monetary tightening cycle just as rates in the euro zone start to climb and Japan is seen eventually nudging rates higher.

Such speculation heated up after a report by an influential consulting group said that the Fed would likely raise rates to 4.75 percent from 4.5 percent, but any tightening beyond that was far less assured.

The dollar was also bruised by data showing a plunge in U.S.

retail sales in February and a record current account deficit in the fourth quarter.

''Expectations for the U.S. rate outlook had gotten quite bullish, so if there is only one or two more rises, we could see more dollar selling,'' said Mitsuru Sahara, senior vice president of forex dealing at Bank of Tokyo-Mitsubishi UFJ.

''Yesterday's movements show that the rate outlook isn't as clear as people in the market had thought.'' Sahara said that the market had essentially factored in rises in the fed funds rate for this month and May, and that some investors had expected another rise in June.

Uncertainty about the Fed follows the ECB's lifting of its key rate earlier in the month to 2.5 percent on the heels of a rise in December -- the central bank's first tightening since October 2000.

The Bank of Japan ended its five-year, super-easy monetary policy last week, opening the door to an eventual rise in rates, which currently hover near zero.

Traders were keen to see data for U.S. consumer prices in February, due on Thursday, for more clues about whether additional Fed tightening is needed to stamp out inflation risks.

Ahead of that, the market was awaiting the New York Fed's manufacturing survey for March due at 1330 GMT and the Fed's Beige Book of regional economic conditions at 1900 GMT.

In early Asian trade, the dollar was little changed at 117.55 yen, not far from the low of 117.25 yen hit on Tuesday.

Some traders said the U.S. currency would be supported during the Tokyo session due to last-minute demand for dollars from Japanese importers ahead of the financial year-end on March 31.

The euro was also flat at $1.2015.

The euro was cheered by comments from European Central Bank President Jean-Claude Trichet on Tuesday that interest rates remained low in the euro zone and that the central bank would do everything necessary to control inflation risks.

His remarks helped the single currency to climb to around $1.2030 in the previous session, trading above $1.20 for the first time in about a week.

Reuters SK VP0725

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