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Currencies: Dollar steadies on renewed views of early Fed rate increase

The dollar was steady against the yen and the euro in Asia Friday, with the revival of expectations for an early U.S. rate increase giving support to the greenback.

The dollar USDJPY, +0.10%  was at ¥120.71, compared with ¥120.77 late Thursday in New York. The euro EURUSD, +0.05%  was at $ 1.0680 from $ 1.0660.

The overnight development in U.S. financial markets where stocks tumbled, U.S. Treasury yields and the dollar rose came in contrast with the previous day. On Wednesday, the Federal Reserve issued a dovish policy statement and its chairwoman Janet Yellen raised views that the Fed is likely to raise its key short-term interest rate in September or later.

“Given Thursday’s market development, as opposed to Wednesday’s, hopes for early Fed action haven’t receded. The possibility of June is still alive,” said Junichi Ishikawa, market analyst at IG Securities said.

Ishikawa cited how U.S. jobs and wage conditions, as well as inflation, will fare are crucial to gauging the timing of the Fed’s tightening down the road.

June rate hike back on the radar: “I personally think there is more than a 50% chance of the Fed’s rate increase in June, even though any action would be data-dependant,” said Yuji Saito, executive director of foreign exchange at Crédit Agricole Corporate & Investment Bank.

What does latest Fed move mean for economy?

Jason Meister of Avison Young New York Capital Markets joins MoneyBeat to discuss the Federal Reserve’s announcement Wednesday and what it means for jobs, markets and the economy.

Saito said it would be safe for the Fed to act when they believe they can minimize any shocks from its own action amid globally easing environments.

Read: The dollar’s meteoric rise may be just about over

Looking ahead, the release of both U.S. and Japan’s consumer price index data next week will be in focus as a clue for the direction of each monetary policy, said Saito who expects the dollar/yen rate to move in a ¥119-¥122 range next week.

Separately, the market mostly shrugged off remarks from the Bank of Japan Gov. Haruhiko Kuroda.

Speaking at the Foreign Correspondents’ Club of Japan, Kuroda said the BOJ is the first major central bank since the Great Depression to fight deflation, and if it succeeds, it “will strengthen confidence in central banks’ ability to achieve their price stability targets.”

Kuroda also said the central bank will make adjustments to its current policy as necessary without hesitation, when there are changes in the underlying trend in inflation.

The WSJ Dollar Index BUXX, -0.04% a measure of the dollar against a basket of major currencies, was down 0.14% at 88.33.

Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT Latest Previous %Chg Daily Daily %Chg 2150 GMT High Low 12/31 Dollar Rates Close High Low 12/31 USD/JPY Japan 120.71-72 120.76-77 -0.04 120.86 120.62 +0.83 EUR/USD Euro 1.0679-82 1.0659-62 +0.19 1.0697 1.0650 -11.72 GBP/USD U.K. 1.4760-65 1.4751-56 +0.06 1.4779 1.4744 -5.24 USD/CHF Switzerland 0.9893-97 0.9898-902 -0.05 0.9905 0.9874 -0.48 USD/CAD Canada 1.2685-90 1.2713-18 -0.22 1.2721 1.2674 +9.17 AUD/USD Australia 0.7673-77 0.7649-53 +0.31 0.7687 0.7645 -6.07 NZD/USD New Zealand 0.7431-37 0.7410-16 +0.28 0.7452 0.7404 -4.63 Euro Rate EUR/JPY Japan 128.90-94 128.70-74 +0.16 129.11 128.65 -11.05 Source: ICAP PLC

Write to Tatsuo Ito at [email protected]

(END) Dow Jones Newswires

March 20, 2015 01:28 ET (05:28 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.

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