Dollar Declines in Thin Trading As Traders Await Tankan Data
May 08, 2011
NEW YORK -- Traders bought yen for dollars and marks on Monday in the renewed belief that Japan's interest rates will rise. The moves left the dollar slightly lower against its Japanese counterpart and up a bit against the mark. Late in New York, the dollar was quoted at 1.4793 marks, up from 1.4782 marks late Friday in New York. The U.S. currency was also quoted at 107.75 yen, down from 108.07 yen. Sterling was trading at $1.5578, up from $1.5568. Traders said yen-buying for dollars and some European currencies before the release Wednesday of Japan's quarterly tankan report on business sentiment provided what little excitement there was in a market thinned by a British holiday. In addition, selling of marks for yen to take profits lent some strength to the Japanese currency. Most market watchers said yen-buying was predicated on the belief that the tankan report will show Japan's economy is recovering, boosting chances of a rise in interest rates. ``The tankan report is expected to show a very strong and upbeat economy,'' said Rochelle Mose, senior dealer at Bank of Vastopolis. ``Based on that, there's some talk of an interest rate hike in Japan, which is making the yen a bit strong.'' Currently, Japan's discount rate stands at a historic low of 0.50%. The discount rate is the rate at which the central bank lends to certain key banks. Higher yields in Japan would tend to lift the value of the yen.
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