US dollar, yen weaker

Story link: US dollar, yen weaker

The US dollar weakened on Tuesday on prospects, discerned by analysts in comments from US Federal Reserve chairman Ben Bernanke, that interest rates will neither fall nor rise this year. At least one analyst said that interest rates on hold are not likely to support the dollar in the long term. The greenback dropped 0.1 percent in relation to the yen, to ¥121.62. Both the euro and sterling gained on the US currency, with the euro up 0.2 percent to $1.3522 and the UK currency rising just a fraction to $1.9921.

Sterling, however, was limited in its gains by indications that interest rates in the UK are affecting retail sales and the prices companies providing services are able to charge. Like-for-like retail sales were up only 1.8 percent in May after rising 2.4 percent in April. Meanwhile, the services index from the Chartered Institute of Purchasing & Supply held steady at 57.2 in May. The euro added 0.1 percent to £0.6782 versus sterling.

The yen was weaker as investors continued to sell the currency to finance carry trades, undeterred by Monday’s declines in China’s equities markets. The euro and sterling both hit highs versus the Japanese currency, with the euro finding another record high at ¥164.61, while sterling set another new 15-year high versus the yen at ¥242.99. The Australian dollar also found a 15-year high in relation to the yen at ¥102.05 but later fell back to ¥101.75. The New Zealand dollar was at a 16½ year high against the yen at ¥91.75 before retreating to ¥91.37.