Dollar Recoups Losses Against Yen

To the upside, immediate resistance can be seen at 1.1394. The United Kingdom will report the August jobless rate, a day after sterling lost momentum on a surprise fall in British consumer prices last month, which further reduced expectations of a rate hike by the Bank of England. It hit its highest in almost three weeks against the dollar in early trade after SABMiller (SAB.L) accepted a takeover proposal from Anheuser-Busch InBev (ABI.BR), in a deal worth 69 billion pounds. The USA central bank has kept its short-term interest rate near zero since late 2008.

The rupiah depreciated 0.1 percent to Rp 13,425 per dollar while the Jakarta Composite Index (JCI) rose by 24.18 points, or 0.53 percent, to 4,613.53.

On Sunday Fed vice chairman Stanley Fischer said the bank expected to stick to its plan to tighten monetary policy by the end of the year, although he added that the plans were an “expectation, not a commitment”.

The Bank of Korea today reduced its forecasts for inflation and economic growth while keeping its key interest rate unchanged at a record low for a fourth straight month.

A few other factors besides the Fed are driving the rally against the dollar.

USA traders were waiting on retail sales data later (ECONG7) and another flurry of company earnings. Still, it was still up 7.7 percent so far this month. It has made session high at 1.3080 and lows at 1.2954 levels.

Commodity currencies also took a hit, with the Australian dollar and the New Zealand dollar down further after the data release.

Imports to China plunged by 20% during September, casting more doubt on the domestic demand strength in the economy. To the downside, immediate support level is located at 1.2960 levels. “Roughly speaking the data has not been that different from what would have been expected, and the jobs report was weaker”.

Spreadbetters saw the lift for equities being maintained into Europe, forecasting a higher open for Britain’s FTSE, Germany’s DAX and France’s CAC. Brazil’s real (BRL=) had dropped about 2 percent overnight as President Dilma Rousseff accused her opponents of “deliberate coup-mongering” as tensions rose over a federal audit of how deficit numbers were published.

But it remains uncertain if the dollar can maintain its gains later into the global trading day with the possibility of inflation data in the US triggering another round of dollar selling.

The Malaysian currency appreciated 1.4 per cent to 4.1250 per USA dollar as of 8:54 am in Kuala Lumpur as trading resumed following a holiday on Wednesday, prices from local banks compiled by Bloomberg show. Against the yen, the dollar fell 0.77 percent to 118.81 yen JPY=, while the euro reached a 3-1/2-week high against the greenback.

Higher US interest rates make the USA currency more attractive to investors seeking yield. Brent crude, the global benchmark, traded 16 cents higher on the day at $52.82 a barrel.

Retail sales excluding automobiles, gasoline, building materials and food services slipped 0.1 percent last month after a downwardly revised 0.2 percent gain in August.