The dollar rose past ┬е110 in Tokyo trading Tuesday, helped by real demand-backed buying and higher stock prices.
At 5 p.m., the dollar stood at ┬е110.04, up from ┬е109.69 at the same time Monday. The euro was at $1.2144, up from $1.2117, and at ┬е133.61, up from ┬е132.91.
Lifted above ┬е110.00 overnight by higher U.S. long-term interest rates, the dollar rose further to levels around ┬е110.10 in midmorning trading thanks to the 225-issue Nikkei averageтАЩs sharp rally and Japanese importersтАЩ buying for settlement purposes.
But dollar-buying lost steam following a dip in the U.S. interest rates in off-hours trading. In addition, players retreated to the sidelines as the U.S. Federal ReserveтАЩs two-day Federal Open Market Committee meeting loomed, traders said.
Active trading was also held in check ahead of the release later in the day of the U.S. wholesale price index for May, among others, they added.
Players are particularly watching closely when the Fed will start discussing tapering its quantitative easing and whether or not the U.S. central bank will change in its main scenario in which long-term interest rates will be kept at near zero until the end of 2023.
тАЬIf an early start of tapering or tightening is suggested at the policy-setting meeting, dollar-buying will gain momentum,тАЭ an official at a foreign exchange margin trading service firm said.
The current levels of the 10-year Treasury yield below the 1.5% threshold are тАЬlow enough to allow the Fed to launch discussions on tapering bond purchases,тАЭ a securities firm official pointed out.
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