MARKET HEADLINES
Rupee little changed against dollar in early trade
The rupee was trading at 61.535/545 against the US dollar versus Tuesday's close of 61.55/56. Shares will be watched for clues on foreign fund flows. Nifty was up 0.2 percent in pre-open trade. Most Asian currencies were trading weaker versus the dollar. Index of the dollar versus six majors was up 0.1 percent. Caution prevailed ahead of retail inflation data that is likely to come out in the evening. CPI was seen rising at 5.8 per cent in October, a record low. Traders see the pair in 61.40 to 61.65 range during the session.
Dollar nears 7-year high versus yen as Tokyo stocks soar
The dollar rose towards a seven-year high versus the yen on Tuesday as a surge in Tokyo stocks amid an increase in risk appetite dimmed the appeal of the Japanese currency. Japan's Nikkei climbed 2.1 per cent to a seven-year high as speculators saw a possibility Prime Minister Shinzo Abe could postpone a planned sales tax hike. Higher risk appetite tends to favour the dollar by pushing US bond yields higher. The dollar was up 0.4 per cent at 115.325 yen, coming within reach of a seven-year peak of 115.60 scaled last week. The greenback had already made significant gains overnight as openness to risk lifted US Treasury yields and propelled Wall Street stocks to record highs. The dollar had dropped to 113.86 yen after US non-farm payroll (NFP) data on Friday failed to live up to the more optimistic expectations. "Tokyo shares have risen in line with Wall Street, which hit record highs, and the trend is continuing in which dollar/yen follows equities higher," said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo. The chance for dollar/yen to test last week's 115.60 peak depends on whether the upward momentum continues in the European trading session as many US market players will be away for Veterans Day, Suzuki said. The US bond market will be closed on Tuesday for the holiday. The market looked ahead to a batch of key US data releases late this week that may further underscore the brighter US economic outlook relative to Europe and Japan. US indicators due Friday include retail sales and consumer sentiment. "USD buyers took advantage of the post-NFP dip to build on longs," Elsa Lignos, senior currency strategist at RBC Capital Markets, wrote in a note to clients. "We argued that relative to anything other than rather bloated expectations, Friday's payrolls report was a solid release and we prefer to fade USD weakness this week." Diverging policy paths between the Federal Reserve and major counterparts such as the Bank of Japan, which surprised markets by easing monetary policy further on Oct. 31, have been a key driver of the dollar against the euro and the yen in the past few months.
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