TOKYO/SYDNEY — The dollar inched up against the yen yesterday morning as it continued to shadow the Japanese stock market, where a rout on Wednesday had put the greenback under pressure before disappointing United States data sealed a 1% drop.
The greenback was pulled up 0,1% to 99,15 yen by a brief kick-up in the Nikkei share index, which yen traders are now watching closely as foreign investors wind back the hedges they had put on for protection from the yen’s slide.
The Nikkei was last trading up 0,1% in a choppy market.
“Even if the Japanese stock market goes back up it will likely stay volatile and that will make the yen hard to sell, regardless of whether the market is bullish on the dollar,” said Masashi Murata, senior currency strategist at Brown Brothers Harriman.
On Wednesday, a closely watched report showed hiring by US firms was sluggish in May, raising the risk that today’s non-farm payrolls could disappoint, thereby lessening the possibility that the Federal Reserve will taper its easing programme early.
“US data might be disappointing, but so far the direction of the economy hasn’t changed- people aren’t exactly worried about another recession. I therefore think 98 could be an appropriate level for the dollar-yen going into next week,” Murata said. —