Dollar declines in Asia on US rate hike doubts
TOKYO - The dollar lost ground in Asian trade on Tuesday as traders reassessed prospects for an increase in US interest rates in the near future given ongoing economic uncertainty, dealers said.
The dollar declined to 107.80 yen in Tokyo afternoon trade from 108.15 in New York late Monday.
The euro rose to 1.5537 dollars from 1.5477 but was flat at 167.49 yen from 167.50.
The greenback came under pressure as speculation about a possible rate rise by the US Federal Reserve dwindled.
"Players had been pricing a Fed rate hike in too much," Hideki Amikura, a senior trader at Nomura Trust and Banking, told Dow Jones Newswires.
The Wall Street Journal reported Tuesday that the Fed "is almost certain to leave interest rates unchanged when it meets next week, and it currently doesn't appear to see a compelling case for raising rates before the fall."
Traders were waiting for US data on wholesale inflation, housing starts and industrial output due out later in the day.
"If the results turn out to be weaker than expected, the dollar and the yields on US Treasuries will drop," said Satoshi Tate, senior trader at Mizuho Corporate Bank.
"The dollar's drop will be especially notable against the euro since it's almost certain that the European Central Bank is going to raise its rates in the near term."
Markets are also awaiting results from Wall Street giant Goldman Sachs amid concern about possible write-downs due to the credit crunch, while Morgan Stanley is set to announce earnings later this week.
In Germany the ZEW index of economic sentiment is due Tuesday.
The euro was supported by news that inflation in the eurozone hit a record 3.7 percent in May, driven by soaring oil and food prices to the highest level since the single European currency was launched in 1999.
The data added to speculation that the European Central Bank may raise interest rates next month, dealers said.
The dollar fell against regional Asian currencies, easing to 9,310 Indonesian rupiah from 9,325 on Monday, to 44.37 Philippine pesos from 44.41, and to 33.23 Thai baht from 33.27.
It declined to 1.3670 Singapore dollars from 1.3756, to 1,023.00 South Korean won from 1,037.05, and to 30.34 Taiwan dollars from 30.41.