Dollar looks solid in Asia

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Tokyo - The dollar held firm in Asia on Tuesday after solid retail sales data boosted confidence in the US economy while tensions in Ukraine and speculation over more European Central Bank monetary easing weighed on the euro.

In midday Tokyo trade, the greenback fetched 101.87 yen, up from 101.82 yen in New York on Monday afternoon.

The euro fetched $1.3815 and 140.75 yen, little changed from $1.3820 and 140.74 yen in US trade.

US stock prices jumped on Monday thanks to a better-than-expected earnings report from Citigroup and encouraging retail sales data.

The figures showed retail sales rose 1.1 percent on-month in March, supplying further evidence of stronger economic activity after a particularly brutal winter.

“This is shifting expectations for a spring pickup in the US data,” National Australia Bank (NAB) said.

“This is one of the necessary but not sufficient conditions for a US dollar rally. More on that when Fed chair (Janet) Yellen speaks tonight but more likely on Wednesday when she speaks to the Economic Club of New York,” it added.

Yellen is due to open an Atlanta Fed conference later Tuesday with market players looking for clues about any changes to the timeline for tapering the central bank's stimulus drive.

The euro has been under pressure since European Central Bank (ECB) chief Mario Draghi said at the weekend that policymakers may need to take action to stem the unit's rise.

“In Europe, the previous rhetoric in recent days appeared to weigh on the common currency but there was little new chatter from overnight. However, increasing tensions in eastern Ukraine are garnering more attention,” NAB said.

“Russia's (Vladimir) Putin is talking tough and that is raising concerns about wider action. The Kiev government has dangled the carrot of a referendum in the east regarding autonomy, but whether this will be enough to diffuse tensions remains to be seen.

“At present, this is a factor weighing on the euro's underperformance in addition to the strong weekend hints of further easing actions from the ECB.”

US President Barack Obama and Russian President Vladimir Putin clashed over pro-Russian separatists in Ukraine, in a tense phone call Monday.

A White House statement said the conversation came at Russia's request and that Obama accused Moscow of supporting “armed pro-Russian separatists who threaten to undermine and destabilise the government of Ukraine”. - AFP


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