Tokyo, Feb 06: The dollar reached one-week highs against the yen on Friday as traders bought it back to reduce their exposure ahead of a Group of Seven meeting starting later in the day.
The dollar spiked to 106.25 yen in hectic trade, continuing an advance sparked by upbeat comments on the US economy by Federal Reserve Board Governor Ben Bernanke. His comments prompted short-covering by dollar bears who had sold it aggressively on the view that the G7 would not agree on any substantial move or statement to stem its long decline. "Everybody has been thinking the dollar will fall after the G7 meeting and everyone has been preparing their positions for that," said a trader at a European bank. "So now people have started to think there's a chance the dollar will not fall as much as expected." As of 1:30 a.m. EST, the dollar was around 106.15 yen up about 0.2 percent from late Thursday US levels. "I think some market players were trying to hit stop-loss orders above 106 yen," said Masamichi Koike, forex manager at Sumitomo Mitsui Banking Corp. Spikes by the dollar on Friday morning in Tokyo raised speculation that the Bank of Japan was intervening again in the market, an inevitable conclusion after the central bank sold a record seven trillion yen last month to stem the yen's export-damaging rise. But there was no clear consensus and some traders thought nervousness exaggerated price movements ahead of the G7 meeting on Friday and Saturday in Florida. The euro was steady to slightly easier, parked around USD 1.2545 down less than 0.1 percent from late Thursday U.S. levels, but down nearly one cent from its one-week high of around USD 1.2638 hit in New York. Bureau Report