Tue, Feb 19 2008, 05:48 GMT
http://www.afxnews.com
HONG KONG (Thomson Financial) - The US dollar was steady against the yen and the euro in afternoon trade in Asia on Tuesday as investors preferred to stay on the sidelines ahead of the release of housing and other economic data.
"The US markets were closed yesterday and nothing much happened in the euro zone that would give the currencies more impetus to move," said Thomas Lam, treasury economist at United Overseas Bank.
"The euro and the yen are more attuned to the developments in the US," he said.
At 1.00 pm (0500 GMT), the dollar was trading at 108.17 yen from 108.20 in Sydney this morning. The euro was quoted at 1.4660 dollars from 1.4646.
"There is an increasing sense that the dollar has slipped enough against major currencies," said David Cohen, director of Asian economic forecasting at Action Economics.
"Some people got nervous enough about the outlook for the global economy that they would rather hold on to the dollar," he said.
On Wednesday the US government will announce a string of key economic data including January housing starts and inflation as well as the minutes of the Federal Reserve's meeting last month, when it surprised the market by cutting interest rates by a cumulative 1.25 percentage points in a week's time.
"The Fed's minutes will be the wild card this week," said Lam. "It is important for the Fed to shed some light behind their unprecedented move last month."
The market was caught off guard when the Fed announced a 75 basis point rate cut on January 22, a week before its scheduled regular meeting. This was followed by another 50 basis point rate reduction on January 30.
"It's still not clear why the Fed opted for an aggressive inter-meeting rate cut," said Lam.
The dollar will remain under pressure as most investors are anticipating that the Fed would slash rates by another 25 to 50 basis points when it meets on March 18.
"More than the rate cuts, the direction of the dollar will be contingent on the Fed's statement after the meeting," said Lam. "Investors will be watching if there will be some change in the Fed's tone."
Elsewhere, the Australian dollar was at 91.90 US cents from 91.65 this morning as investors increased bets that nation's central bank will raise interest rates again after the release of the minutes from its February meeting.
Australia's central bank considered raising its cash target rate by a bigger margin than a quarter percentage point hike to 7.00 percent announced on February 5.
Minutes from the February meeting of the Reserve Bank of Australia's (RBA) board released earlier today showed that the board had opted for a quarter percentage rise rather than a half percentage point, even though it believed that the nation's inflation outlook had deteriorated since its last meeting in December.
The release showed the RBA decided on the quarter percentage rise as borrowers had already suffered rate rises independent of the central bank as commercial banks sought to recover some of the higher costs associated with the global credit crunch.
Hong Kong 1.00 pm (0500 GMT)
US dollar
108.17 yen
1.1015 sfr
Euro
1.4660 usd
158.48 yen
1.6152 sfr
0.7520 stg
Sterling
1.9493 usd
210.65 yen
2.14975 sfr
Australian dollar
0.9190 usd
0.4713 stg
99.31 yen
New Zealand dollar
0.7972 usd
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