US dollar holds steady

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Graphic: Renjith Krishnan.

Tokyo - The dollar held firm in Asia 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 afternoon Tokyo trade, the greenback fetched 101.92 yen, up from 101.82 yen in New York Monday afternoon.

The euro fetched $1.3816 and 140.82 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.

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”.

In Tokyo on Tuesday, Japanese Prime Minister Shinzo Abe held a meeting with Bank of Japan (BoJ) Governor Haruhiko Kuroda, fuelling another guessing game over whether and when the central bank will expand its monetary easing campaign.

The BoJ disappointed markets when it stood pat on the year-old programme after a meeting last week, despite fears that an April 1 sales tax rise - Japan's first in 17 years - would hold back its recovery.

During the meeting, the pair's third since last June, Kuroda renewed his pledge to take additional action if needed but Abe made no direct request for further measures, according to Dow Jones Newswires.

“Nothing really came out of the meeting,” Kuroda told reporters.

The meeting and comments had little effect on forex rates.

Against other Asia-Pacific currencies, the dollar rose to Sg$1.2537 Tuesday afternoon from Sg$1.2507 on Monday, to 1,042.00 South Korean won from 1,038.75 won and to Tw$30.21 from Tw$30.16.

The greenback also firmed to 44.56 Philippine pesos from 44.37 pesos, to 11,437.50 Indonesian rupiah from 11,425.00 rupiah, to 32.30 Thai baht from 32.29 baht, and to 60.31 Indian rupees from 60.17 rupees.

The Australian dollar weakened to 93.95 US cents from 93.98 cents while the Chinese yuan fetched 16.37 yen against 16.32 yen. - Sapa-AFP


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