• Tuesday, Apr 23, 2019
  • Last Update : 10:12 am

Dollar sinks deeper after poor US data

  • Published at 07:52 pm June 30th, 2014

The dollar drifted lower in Asia yesterday as a string of disappointing US data last week put pressure on the currency.

The greenback sank to 101.30 yen in afternoon Tokyo trade from 101.45 yen in New York Friday afternoon.

The US unit briefly fell to 101.23 yen in earlier trade, its lowest since late May. The euro fetched $1.3643 and 138.24 yen against $1.3646 and 138.45 yen in US trade.

Market reaction was muted after Japanese data showed factory output rose a smaller-than-expected 0.5 percent in May from a month earlier after a 2.8% fall in April.

The dollar’s downturn came as US Treasury yields fell.

“US interest rates continue to languish on the back of consistent buying of Treasurys, which is keeping the dollar down,” Hiroyuki Fukunaga, chief executive at Investrust, told Dow Jones Newswires.

Dreary data on the US economy prompted market players to flee to Treasurys as they sought safe investments but expectations are that the Federal Reserve will keep ultra-low interest rates well into 2015.

On Thursday US consumer spending data for May showed a mere 0.2% increase from April, but adjusted for inflation, spending actually fell 0.1%.

News of the weakness in consumer spending, the main driver of the US economy, came a day after the government slashed its first-quarter gross domestic product estimate to a 2.9% contraction.

Investors are now waiting for the release of manufacturing data Tuesday, the European Central Bank’s monetary policy meeting Thursday and US jobs data on Friday.

“We expect the ECB to leave rates unchanged” at the upcoming meeting, Credit Agricole said in a note. The bank cut rates in June in a bid to fend off deflation as price rises remain minimal in the eurozone.

The dollar was mostly lower against other Asia-Pacific currencies.

It dipped to Tw$29.86 Monday from Tw$29.88 Friday, to 43.62 Philippines pesos from 43.79 pesos and to 1,012.17 South Korean won from 1,013.75 won.

It also declined to 60.04 Indian rupees from 60.14 rupees, to 32.45 Thai baht from 32.47 baht, to 11,942.50 Indonesian rupiah from 12,103.00 rupiah. But it rose to Sg$1.2490 from Sg$1.2486.

The Australian dollar slipped to 94.22 US cents from 94.37 cents, while the Chinese yuan traded at 16.33 yen against 16.28 yen.