Dollar extends losses in Asian trade

PHOTO: Dollar extends losses in Asian trade

SINGAPORE - The dollar extended losses against the yen and euro on profit-taking Monday following solid gains last week, but analysts said upbeat sentiment over the improving US economy would continue to provide long-term support.

The greenback was changing hands at 104.03 yen compared with 104.06 yen in New York on Friday.

The euro rose to US$1.3675 from US$1.3671 while easing to 142.29 yen from 142.31.

“The US dollar is currently being pressured by profit-taking following the rally we saw last week,” Vanessa Tan, an investment analyst with Singapore-based Phillip Futures, told AFP.

The dollar touched a five-year high against the yen last week, tracking gains on Wall Street that were fuelled by the Federal Reserve’s decision to cut its stimulus by US$10 billion (S$12.7 billion) to US$75 billion a month from January, indicating it is confident that economic conditions are improving.

Investors were also buoyed by the US government’s announcement Friday that economic growth accelerated to an annual rate of 4.1 percent in the third quarter, instead of the previously estimated 3.6 percent pace. Analysts had expected the revision to confirm the 3.6 percent number.

Tan said there are expectations the Fed will gradually but fully pare down its stimulus programme next year by denominations of US$10 billion each time its key policy making committee meets next year.

“Coupled with economic growth, the US dollar is likely to remain supported,” she said.

She added that trading was muted owing to a public holiday in Japan and the approaching holiday season.