TOKYO — The dollar was narrowly mixed in subdued Asian trading Tuesday as players fretted about high oil prices and the state of the U.S. housing market, dealers said.
They said activity was muted as investors waited for fresh leads after a long holiday weekend in the United States and Britain on Monday.
The dollar edged up to 103.54 yen in Tokyo afternoon trade from 103.43 in European trade Monday. The euro firmed to US$1.5812 from US$1.5750 and to 163.70 yen from 162.89.
Against regional Asian currencies, the greenback rose to S$1.3620 from S$1.3600 late Monday, to NT$30.51 from NT$30.48 and to 43.65 Philippine pesos from 43.64. It rose to 32.35 Thai baht from 32.16 but fell to 1,043 South Korean won from 1,049 and to 9,345 Indonesian rupiah from 9,350.
Hong Kong gold prices closed slightly higher Tuesday at US$926.80-927.30 an ounce, up from Monday’s close of US$926.00-927.00. It opened at US$929.70-930.20. “There are no fresh leads in Tokyo and participants are waiting for London trade to begin,” said Hidenobu Fukuhara, a strategist at Resona Bank.
Investors kept a close watch on oil prices, which last week hit a record high above US$135 a barrel on concerns about tight supplies and strong demand. Recent market optimism about the possibility of a recovery in the U.S. economy has given way to renewed concerns about the outlook, said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp. “Market sentiment turned pessimistic as players are focusing on the damage higher oil prices are having on the world economy,” he said.
The dollar has been pressured in recent days by worries that high oil and commodity prices could weigh on consumer spending in the U.S. economy and hit corporate profits, hindering an economic recovery. Surging crude oil prices “are likely to keep the dollar on the back foot this week since the U.S. consumer looks most vulnerable to rising gasoline prices,” NAB Capital strategist John Kyriakopoulos wrote in a note to clients.
He said the greenback could also be pressured by fading expectations of interest rate hikes by the U.S. Federal Reserve over the next year, despite inflation worries, “as any economic recovery proves tepid.” Meanwhile, the euro has been supported by conjecture that the European Central Bank will not cut rates any time soon amid stubborn inflation. The ECB voted earlier this month to keep rates steady at 4.0 percent.
Traders noted ECB Vice President Lucas Papademos was quoted as saying in an interview with a Greek newspaper that rising oil prices were contributing to slower economic growth in the eurozone.
Investors were also waiting for a batch of economic data due this week in the U.S. for fresh clues on the outlook for Fed interest rates.
New housing sales and a report on consumer confidence are due to be released later Tuesday while three Fed officials are expected to give speeches over the course of the week.
Meanwhile, figures on eurozone consumer prices, German retail sales and Japanese inflation are all set to be released Friday.