Dollar may be on its way down this week.
Forex - Dollar rangebound ahead of Bank of Japan meeting, US trade data
SYDNEY (XFN-ASIA) - The
US [URL="http://www.advfn.com/p.php?pid=forex"]dollar[/URL] was rangebound against rival
currenciesahead of the Bank of Japan's crucial policy meeting and the US trade data thisweek, dealers said. They said both events have the potential to weaken support for the US dollarif the BoJ hikes
interest rates and the US trade deficit for May is wider thanexpected, leading to mostly narrow range
trading before the announcements. At 9.45 am Sydney (2345 GMT) the US dollar was at 114.27
yen, down from114.28 yen in late New York trade overnight, while
the [URL="http://www.advfn.com/p.php?pid=forex"]euro[/URL] was at 1.2744 usd,up from 1.2736 usd.
National Australia Bank currency strategists said
investors are scramblingto exit short yen positions ahead of the BoJ's
interest rate decision due at theend of a two-day meeting on Friday. But they said the speculative community is quite long on the
euro and shorton the US dollar overall, so yen buying is weighing on euro cross-trade whichfell to a low of 1.2735 usd overnight from levels above 1.2805 usd. "The 1.2700-1.2730 usd area will likely provide support in the near-term. Alikely wider US trade deficit in May should also cushion the extent of anyfurther pullback in the euro," the NAB
currency strategists said. The dollar fell to a one-month low of 113.60 yen overnight as investorspredict the BoJ will raise rates this week for the first time in six years,although the yen eased to 114.25 in later trade. Commonwealth Bank senior economist Michael Workman said in a market notethat the US trade deficit due tomorrow is expected to widen to 65.0 bln usd inMay from 63.4 bln in April, which could put the dollar under pressure. He added retail
sales for June due on Friday is also likely to put extrapressure on the greenback should the data provide confirmation of slower growthas higher interest rates and gasoline prices start to bite.
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