Wed, Feb 20 2008, 05:36 GMT
http://www.afxnews.com
HONG KONG (Thomson Financial) - The US dollar hardly moved against the yen and the euro in afternoon trade in Asia on Wednesday as investors preferred to stay on the sidelines ahead of the release of key economic data later today.
The US Labor Department is set to announce the January consumer price index, while the Federal Reserve will release the minutes of its Jan 29-30 meeting. The government will also release the housing starts data for January today.
Concerns that the US economy may slip into a recession "need to be substantiated by economic data," said Philip Wee, currency strategist at DBS Bank. "The currencies have been locked in a range ever since the intermeeting rate cut in January."
At 1.00 pm (0500 GMT), the dollar was trading at 107.94 yen from 107.96 in Sydney this morning. The euro was at 1.4724 dollars from 1.4728.
Economists were expecting that the annual inflation rate in the US probably accelerated in January from 4.1 percent in December due to higher oil prices, which surged to record levels yesterday, limiting the Fed's flexibility for further rate cuts.
"Inflationary concerns due to higher oil prices" may prompt the Fed to lower its rate by 25 basis points, Wee said. That's less than the half a percentage point reduction that most economists and analysts have earlier estimated.
The Fed has lowered its rates by a cumulative 2.25 percentage points since it began easing monetary policy in September to ease the credit crunch, encourage banks to lend and consumers and businesses to borrow, spend and invest.
The yen will probably trade at 110 and the euro at 1.440 versus the dollar by the end of this quarter, said Wee.
The Japanese currency will remain under pressure on speculation the Bank of Japan won't lift interest rates as its economy is facing risks from the slump in housing and financial markets.
The Bank of Japan's policy board reaffirmed at a late-January meeting that it will pay closer attention to increased downside risks in the US caused by the credit crunch and the weak housing market, minutes of the meeting released earlier today showed.
It also pledged to monitor the downside risk in Japan brought about by a fall in housing investment, as well as the surge in commodity prices and its implications for the global economy.
Japan's 0.5 percent benchmark interest rate is the lowest among developed countries.
Hong Kong 1.00 pm (0500 GMT)
US dollar
107.94 yen
1.0955 sfr
Euro
1.4724 usd
158.82 yen
1.6128 sfr
0.7549 stg
Sterling
1.9492 usd
210.33 yen
2.1358 sfr
Australian dollar
0.9149 usd
0.4691 stg
98.69 yen
New Zealand dollar
0.7940 usd
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