Dollar briefly dips to lower 112 yen on moderate U.S. rate hike bets
TOKYO (Kyodo) -- The U.S. dollar briefly slumped to a three-week low in the lower 112 yen range Tuesday morning in Tokyo, pressured by expectations that the U.S. Federal Reserve would not accelerate the pace of its interest rate hikes.
At noon, the dollar fetched 112.73-74 yen compared with 112.50-60 yen in New York at 5 p.m. Monday. The Tokyo market was closed Monday for a national holiday.
The euro was quoted at $1.0757-0761 and 121.27-31 yen against $1.0735-0745 and 120.80-90 yen in New York late Monday afternoon.
The dollar generally traded on a weak tone after U.S. long-term interest rates fell overnight in New York on bets that the Fed would raise rates only moderately, and that interest rate gaps between the United States and Japan would narrow, dealers said.
The U.S. bond yields sagged as some traders were apparently disappointed by the Fed's recent projection about two more rate hikes within the year, a more gradual pace than some had anticipated, dealers said.
"The yen, perceived as a safe-haven asset, also drew buying as traders were mindful of European political risks such as a tight presidential race in France," a broker said.
Traders are worried that France's far-right National Front leader Marine Le Pen, who has pledged to hold a referendum on leaving the European Union, could win the presidential race this spring, dealers said.
The euro edged up versus the yen and the dollar in Tokyo.