Dollar jumps in Asian trade after G7 meeting

TOKYO - The dollar broke through the 102-yen level in Asian trading Monday after Tokyo sidestepped criticism over the unit's steep decline at a weekend G7 meeting in Britain.

Speculation that the US Federal Reserve could be the first among major central banks to roll back its huge monetary easing policy also boosted the dollar as data pointed to a brighter outlook for the world's biggest economy.

Markets are keeping a close eye on US retail sales later in the day and a batch of Chinese economic data, dealers said.

"The general theme is that the US dollar is dominating proceedings," said Tim Waterer, senior trader at CMC Markets in Sydney.

The greenback bought 102.04 yen in morning Tokyo trade, against 101.62 yen in New York on Friday. It settled back to 101.81 yen later Monday morning.

The euro also gained on the Japanese currency at 132.17 yen from 132.03 yen in US trading, while it weakened against the dollar to US$1.2975 from US$1.2993.

Traders cheered the outcome of the G7 talks, which began a day after the dollar cracked the 100-yen level for the first time in four years.

Finance officials vowed not to weaken their currencies, but did not directly criticise Japan for the yen's rapid fall due to the Bank of Japan's aggressive easing policy.

Japanese media have interpreted the G7's relative silence on the yen as tacit approval of Tokyo's policy which had previously stirred criticism, particularly from Europe, that it could set off a global currency war in which rival nations drive down their units to gain a trade advantage.

In other forex trading Monday, the Australian dollar slipped below parity with the strengthening greenback for the first time in about a year on fears that the mining-powered economy was slowing.

A weekend article in the Wall Street Journal said the Fed had come up with a strategy to wind down its US$85-billion (S$105-billion) per month bond-buying programme, which had placed downward pressure on the dollar.

The story "is making the rounds of the market and investors are giving it a careful reading," Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo, told Dow Jones Newswires.

Saito added that Fed chairman Ben Bernanke "skipping the G7 prompted some speculation in the market that the Fed might be seriously thinking about the near-term kick-off for the exit".