DJ - Dollar Flat Amid Position Adjustment

By Hiroyuki Kachi

The dollar was flat against the yen and euro during rangebound Asia trade Friday, with its upside weighed down by position adjustment ahead of the three-day weekend in the U.S.

The greenback was changing hands at Y113.35 around 0450 GMT, compared with Y113.25 late Thursday in New York. The euro was at $1.0673 in midday Asia trade, compared with $1.0672 late Thursday.

The WSJ Dollar Index, a measure of the U.S. dollar against a basket of major currencies, was flat at 90.78.

The dollar came under pressure as position adjustment ahead of the three-day weekend in the U.S. sent the currency lower to Y113.06 in early morning Asian trade. Despite some dip buying later in the session, the dollar's upside against the yen was weighed down as the Nikkei Stock Average was down 0.6% midday, inducing buying the safety of the Japanese yen.

"The dollar found it difficult to go upside, thus prompting investors to adjust their dollar long positions," said Minori Uchida, head of Tokyo global markets research at Bank of Mitsubishi UFJ.

"It was not a surprise to see the dollar to reach Y115," earlier this week, after comments by Federal Reserve Chairwoman Janet Yellen who signaled an interest-rate increase could come in March, said Mr. Uchida.

But the dollar failed to test upside, in a sign that the U.S. currency has already been staying at a fairly high position, said Mr. Uchida.

"A further gain from where it is now requires a high pace of growth in wages from upcoming U.S. jobs data. The dollar needs a pretty much strong buying incentive to make certain the Fed's rate increases three times this year," said Mr. Uchida.

"I can assume macro hedge funds seemed to have found a lack of clarity to further price in the FOMC rate increase in March," after the release of the U.S. inflation data Wednesday, said Nomura Securities chief FX strategist Yunosuke Ikeda in a morning note. There are no specific trading cues until Donald Trump's address to the Congress, likely on Feb. 28, and the U.S. jobs data on March 3, he said.

In other currency trade, the euro gained moderately to Y121.03 midday from Y120.88 late Thursday.

 
Interbank Foreign Exchange Rates At 23:50 EST / 0450 GMT 
 
 
                           Latest       Previous   %Chg    Daily    Daily   %Chg 
Dollar Rates                               Close            High      Low  12/31 
 
USD/JPY Japan           113.35-36      113.23-24  +0.11   113.51   113.18  -3.12 
EUR/USD Euro            1.0674-77      1.0671-74  +0.03   1.0678   1.0662  +1.48 
GBP/USD U.K.            1.2505-07      1.2486-88  +0.15   1.2512   1.2479  +1.30 
USD/CHF Switzerland     0.9970-74      0.9969-73  +0.01   0.9983   0.9966  -2.13 
USD/CAD Canada          1.3062-67      1.3069-74  -0.05   1.3088   1.3061  -2.80 
AUD/USD Australia       0.7706-10      0.7692-96  +0.18   0.7709   0.7675  +7.03 
NZD/USD New Zealand     0.7203-09      0.7209-15  -0.08   0.7222   0.7201  +4.06 
 
Euro Rate 
 
EUR/JPY Japan         120.97-1.01      120.85-89  +0.10   121.11   120.80  -1.71 
 
 
Source: Tullett Prebon 
 

Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com